Before you decide to own a rental property and become a landlord, there are a few things you need to consider. Being a landlord isn’t a part-time, money-on-the-side type job. It’s a full-time career and should be treated as such. Like most jobs, owning a rental property comes with its own risks. There are many expenses to be handled, repairs to be made, and people to deal with. While owning rental property has its benefits, here are three things to consider beforehand – to make sure you know what is really involved.
Owning property comes with its expenses. Before you start, you will need some savings, including a sizeable downpayment, an emergency account for repairs, and a sizeable income. There are two types of property expenses that you can expect – fixed expenses and variable expenses. Fixed expenses include:
- annual property taxes
- routine maintenance and repair
- property management services
Variable expenses are unplanned costs that come your way unexpectedly, such as replacing appliances, roof and fencing replacements, and flooring and plumbing repairs. These expenses can take you by surprise, so you’ll need to have savings or emergency funds set up just in case. To prepare for any emergency expenses, make sure to have a list of services on hand. For instance, you can find waterproofing services in Stow, OH if you’re in need of basement wall repair, foundation repair, or waterproofing services.
Whether you’ve bought a property that’s in good condition or one that’s been damaged by time, repairs are necessary before you put the home on the market. You need to make sure the property will be profitable by investing money into touch ups and getting it up to code to ensure a positive cash flow. Remodelling and renovations will increase the cost of the property and can include kitchen and bathroom remodelling, hardwood floor installation, window and door installation or repair, and new construction, like garages and sheds. These services are offered and taken care of by residential construction in Lyndhurst, OH.
Ensuring that the property meets the special requirements needed for rental properties can increase the start-up cost. Making repairs to meet safety standards is also important.
Dealing with tenants
You might not always have the ideal tenants renting out your property. While most tenants pay rent on time and respect the property, at one point you might run into that one tenant who comes with baggage. Remember, a tenant is not just a source of your income – they are real people with real problems, who you will inevitably have to deal with in some way or another.
As a landlord, it’s your responsibility to keep the relationship between you and your tenant hassle free and professional. You will need to be able to make judgement calls. If a tenant is not paying rent on time and misusing the property, you shouldn’t be afraid to confront them about it and make a decision on whether you want to keep the tenant on or evict them. That means you need to know your state’s eviction laws and how to handle these types of situations. To avoid becoming stuck with problematic tenants, you can get tenant screening free of charge online.
Owning rental property is an investment and requires care, commitment, and financial stability. While you should be aware of the risks involved, including stress and expenses, owning rental property does come with its perks and is a great way to make money.