Having a property rented out is sure a great way to earn revenue. However, this also entails a big responsibility. If you are venturing out in becoming a landlord, here is a step-by-step guide that can help you jumpstart that career in the real estate industry.
Secure a Property that can be Rented
Of course the first step in becoming a landlord is having a property that can be rented out by tenants. Hence, it is imperative for you to purchase a rental property. In doing so, you would come across several considerations such as the location of the property and the average rental cost in the area, the type of property whether it is an apartment, a condominium or a townhouse, as well as the mortgage and property taxes that come with it among others.
Consider the Money Matters Involved
In becoming a landlord, you need to be equipped with ample knowledge in terms of handling all the money matters involved in renting out a property. Consider the rate of return of your investment by having an accurate estimate of the rent you will be able to collect from your property. Verify whether the monthly rent that you will be able to collect will be sufficient to cover the mortgage costs, preferably exceeding your mortgage to cover for other maintenance expenses and property taxes. Only then will you be able to have a revenue.
You also need to consider that landlord insurance is relatively higher because of the risks of having renters live out on your property. The best landlord insurance will offer a comprehensive insurance package that is suitable for small or large rental properties. It can be tailored-fit to include coverage on subsidence, legal expenses and lift insurance.
Be Aware of the Laws
Different countries and states implement different laws in terms of renting out properties. There are certain federal laws that account for the habitual conditions of the renters, as well as anti-discrimination bills that protect both landlords and tenants. There are also several provisions that encompass particular details on rental property procedures such as security deposits or level of access to property.
There are also laws that you need to abide by in writing a contract. While there are already a number of lease templates that you can utilize, you can still customize the contract based on what best fits your circumstances. Make sure to be very specific in your terms and conditions, even going into detail whether pets are allowed on your property or if you prefer a family or young professionals. You can also perform a background check on your potential tenant later on and there are also laws that regulate these character investigations.
In conclusion, having a tenant to rent out your property is a good source of positive cash flow. But ensuring that you and your tenant are both on the winning end entails a significant responsibility. Thus, assess and reassess yourself before becoming a landlord, but nonetheless, the steps above will surely guide you.