Do You Have the Right Mentality to be a Landlord?
Are You a Handyman?
Home repairs can add up quickly and some renters can be quite demanding when it comes to having things working properly. So have a plan in place for repairs and the budget to back them up if you have to outsource them.
How Well Do You Deal with Stress?
Owning rental property can be a very rewarding experience but it does have its disadvantages. Ever heard of Murphy’s Law? That’s right, sometimes it feels as if everything is breaking at once and the stress that follows it can be a little overwhelming at times.
A Rainy Day Fund is a Must!
Ok, it’s 35 degrees outside and your tenants call to say the heat isn’t working and their 2 kids are freezing. While on the phone you hear a large rush of water and your tenant informs you the water heater just busted. What do you do? Well, you are looking at a possible full replacement cost of about $7,000 for both the HVAC and the Water heater. A nest egg for capital improvements is a must and always plan on the worst-case scenario.
Are You a People Person?
People skills are huge when owning an investment property. You must be willing to talk things out with your renters and having a relationship where the tenant feels they can talk to you is a must. Things happen in life and having a good relationship with your tenants is a must.
Are You Still with Me? Great! On to the Next Steps
Pay Down Your Personal Debt
Don’t be cash-poor. Position yourself where your personal debt is low and always have that rainy day fund for your personal life and any investment properties. You will need down payment money if not paying cash! Down payment for Investment property is usually 20% minimum and the interest rate is usually higher than your primary mortgage. Always know these numbers before you purchase.
Location, Location, Location
Did I say location? You need to find the right location that is convenient to you and will bring you the most bang for your buck. I like to be able to get to my properties within 30 minutes in case there are any problems I can quickly attend to my renter’s needs.
Know Your Market Before You Buy
How much will this property rent for? What is your return on investment? Although with the cost of property the return on investment is getting smaller a good rule of thumb is to have a 10% return on investment.
Always Be Insured
Home Owners insurance is a must! You may want to consider Land Lord insurance also; covers property damage, lost rental income and adds liability coverage as well.
Should I Buy a Fixer-Upper?
Fixer-uppers can be a great way to get into the investment property world but you should know the cost to get the property up to your standard required to rent the property before you purchase. If you know how to do these repairs yourself you could save a boatload of money and enter the investment world ahead of the game. If you don’t know the cost to fix or you cant do the work yourself you may need to pass on fixer-uppers!
NEVER Buy the Best or the Worst Property on the Block
Weigh your risk and your reward and determine if Investment properties are right for you. If investment properties are right for you they can be a wonderful reward and a great retirement plan! If you feel you are cut out to be a landlord give me a call, I love working with investors and can help you in every step of the way from your mortgage to your insurance to your purchase.
The younger you start the better your return. Real Estate builds Wealth!
Be Smart! The Wrong Investment could be Catastrophic.
Best of Luck and Happy Investing!
Dan Adams Jr. Realtor®
License #282278 TN
One Click Realty, LLC.