People dream of becoming landlords, how hard can it be to walk to the mailbox every month, and cash rent checks?
Let’s get it out of the way early — making money as a DIY landlord is NOT going to be as passive you envisioned. Expect to spend many of your evenings and weekends dealing with property and tenants issues.
The whole point of investing in rental housing is to collect monthly rent payments, yet this can be one of the most challenging aspects for a newbie landlord. There will be times when you have to hound tenants for the rent. Be firm about rent payments, you rely on them for running your business. Being lenient with your tenants will open the door to a slew of problems. If they don’t pay, follow your state’s laws, and if needed, start the eviction process.
So you’ve got your first rental ready to go. You’re eager to start renting and making some money. Resist the urge to rent to just anyone because you’re concerned with vacancy. Make sure to stick your plan — be vigilant about screening new tenants. Leasing to a tenant that doesn’t meet your standards will only bring more problems than it’s worth, it’s better to be patient and wait for the right candidate.
Fair housing laws are in place to protect the tenant — they are a big deal. Don’t put yourself in a position where you’ll have to defend yourself in court. If you’re not sure about something, consult an attorney, or better yet, read up and educate yourself, it’s bound to come up again.
You want your rentals to be the best they can be to attract prospective tenants, but remodeling to your (expensive) tastes is not a good business decision. It’s fine to remodel but resist the urge to go overboard. Unless your property is in an area where you can charge appropriate rental rates, it will be difficult to recoup your investment.
The right marketing strategy will make a world of difference. Make sure to use the right avenues to market your vacancies. Newspaper ads are on life support. You need to place your ads where the right clientele will see it.
Place online ads and use dedicated web sites to find great renters. To entice prospective tenants, pay a professional to take brilliant photos and create a virtual tour. This will save you tons of time by not showing your property to people who aren’t that interested or can’t afford it.
First impressions matter, don’t underestimate curb appeal. Always keep your property looking good — inside and out. Prospective tenants will never get to see how beautiful the new kitchens and bathrooms are if they pass on your property because it looks dingy from the outside.
BONUS: Stay Organized
You may be surprised how much work is involved with your rental property business. The mountain of paperwork alone can be daunting if you’re not prepared. Paying attention to details and staying organized will help you to stay focused and promote success.
Just because you’re starting a “side business” to produce a passive stream doesn’t mean it’s going to be easy — this is not a hobby. There is a learning curve to honing the skills needed to run your rental property, but things get easier to manage with every new tenant and each additional property.
You will face challenges, you need to treat your new venture as a “normal” business. Plan on making mistakes when you’re starting out, but expect those growing pains to wane as you acquire experience and grow. Stay positive and focus on your goals.