How to Become a Landlord

If you want to know how to become a landlord you will find that becoming a landlord is actually pretty easy. You just need to own something to rent out and find a willing participate to rent it from you. There are only 3 steps you need to take to start your journey.

Step 1 Buy a Property

Of course if you don’t own anything you don’t have anything to rent out. So buying a property is the first step. But don’t just buy anything. Make sure it meets certain criteria.

1. It is a Good Property in a Good Area

2. You Know the Expenses

3. You Know the Average Rent

Good Property in a Good Area

I was once told to only buy rental properties that you would want to live in yourself, and I think that is a fantastic way of looking at it. Would you rather live in a new house next to a school and close to a shopping mall in a quiet neighborhood or would you rather live in a broken down house in the bad part of town?

Buy high quality houses in good neighborhoods and you will avoid a lot of problems down the road. You will also have more demand for the property and less maintenance fees, especially if the house is new.

Know Your Expenses

Becoming a landlord comes with its fair share of expenses. Ideally you want these expenses to be as low as possible so that you can cover them with the rent money.

You also want to have an idea of just how much it will cost to keep the property when it isn’t rented. This way you don’t end up taking on “more then you can chew” and declare bankruptcy if you go a few months without a paying tenant.

Some things you should look at include;

Mortgage Payments
Property Tax
Insurance
Landscapers (If you have them)
Property Management (unless you manage it yourself)

In addition to this there can be unexpected fees and repairs. For example with my first property the renter disappeared and according to the law we had to put all of her stuff in a storage facility for 3 months.

Other tenants might break something and disappear, or they might not pay and leave you will the bills for that month and no rent to cover it. To be on the safe side make sure you have at least 6 months worth of expenses saved up to cover any unknown expenses or troubles that you might encounter.

If you want to know how to become a landlord that is actually going to last through the tough times you need to be prepared for your expenses.

Know the Average Rent

So, you want to know how to become a landlord? Well then you are going to have to know how much you can realistically rent the property for. Look at other similar houses in the neighborhood and see what they are renting for.

If the average rent for a house like yours is going for $690/month that gives you an idea of how much money you can realistically ask. Compare this number to your estimated cost to see just how much of a difference there is.

Step 2 Find a Tenant

The second step on this how to become a landlord guide is to find a tenant. You can find them though online ad sites like Cragslist if that doesn’t work you can also spend a little money and buy an ad in the newspaper or even put a sign out front saying that your house is for rent.

Once you have people checking out the property and interested you can have them fill out an application. Make sure to ask for 2 references just so you know what kind of a person they are and check their FICO Score as well.

Ask their references if it is ok to call them if you can’t get a hold of the tenant. Then check their employers and see how long they have been working there. The last thing you want is a renter that moves from work to work and apartment building to apartment building.

After you have made sure everything is going ok, sign a landlord and tenant agreement forum indicating all of the rights and conditions of each party. Here are some free forums online for pretty much any situation a landlord will come across.

http://www.thelpa.com/lpa/free-forms.html

Finally before they move in do a checklist with the renter to make sure you have all the damages that are in the house before they moved in. Both of you should sign it to help avoid any disputes down the road.

Step 3 Manage the Property

The last step on this how to become a landlord guide is managing the property. Now you can manage the property yourself, or you can have somebody else managing it for you.

If you have a property management company take care of it they will charge a small percentage of the rent money, but they will take all the hassle out of it. If the property is cash flowing and you don’t want all the stress that comes with managing it yourself, hiring a property management company is a great alternative.

If you want to keep more of the rent money however, you can always manage the property yourself. With just have a couple properties and you live near them it isn’t that bad.

After you have learned how to become a landlord your next goal is just to keep the rent money coming in. Send your tenants a friendly reminder before their payment is due. Just so they remember and are less likely to miss their payment date.

You may also want to reconsider raising the rent. While you can raise the rent each year you don’t have to. If you raise it too much and too often your renters will move out and you will have to go find new tenants to replace them costing you more money in the long term.

How to Become a Landlord Conclusion

Now that you know how to become a landlord you can simply go out there and start making it happen. At some points it can really be a headache, but if you stick with it long enough it can pay off pretty big, especially once the properties are paid off and the mortgage payments are gone.

Real wealth is created slowly and consistently as time passes by. That is exactly what becoming a landlord lets you do.

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