New To Being A Landlord? Get To Know What Could Affect Your Profits
Real estate tends to be a good investment. A lot of people like to buy low, add value, and then sell on again at a high. Most people, however, take the time to become a landlord and let out their property.
Maybe you’ve made a similar decision? You could have decided to let out a portion of your home, seeing as you’ve got the spare space, and you’re not sure how to go about it. You’re still living in the same property, and opening it up to a stranger can be intimidating.
This might be your first ever investment property you’ve managed to secure, and now you’re keen to become the best landlord in the area. After all, you know that a happy tenant stays longer and pays more!
No matter what position you find yourself in, if you’re new to being a landlord, you need to know what could affect your profits in the long term. Knowing the issues you’re likely to run into will help you lower their impact when they eventually strike. And trust us, you’re going to have some trouble to deal with at some point!
Because of that, we’ve put together a little guide on the things you should know about being a landlord. Read it through to find out what you should expect and how to navigate the potential issue.
It’s Best to Define a Target Tenant
When you have a target tenant in mind, you know who the property needs to be prepared for. You know what expectations for living arrangements to keep in mind, and it’ll be much easier to decorate the space according to the wants of the market. Having all of this information on your side is key to finding a good tenant and making sure they want to stay!
After all, there will be a wealth of difference between a single working professional and a young couple looking to settle down. The former won’t need as much space, for one, and the latter will care more about family friendly amenities, for another. Keep this in mind when you’re setting up your rental; who do you want to attract? Decide that and then make the space fit.
Talking to an Agent Can Reveal a Lot
If you’re going to be letting your property out on your own, be sure to get some advice from an agent first of all. It’s hard to bring in a reliable, quality tenant without some insider views from those who know what they’re doing.
Unless you arrange a tenancy with someone you already know well, who you can guarantee has the funds to keep paying the rent, you’ll want to be aware of the ins and outs here.
Get some information on how to properly screen tenants, and how to ensure you put together a lease that’s fair and appropriate for both parties. You can also ask how to track down tenants that go awry, as well as what to do if the tenant cannot and/or refuses to pay on time more than once.
Rushing in a Tenant isn’t a Great Idea
Someone wants to rent from you – yay! It’s a very positive sign, and you might be tempted to sign them into the lease as soon as they agree. However, when you rush a tenant in, things are more likely to go wrong, and it’ll be hard to get them back out again.
You need to know at least a few things about them, such as if they can actually afford the property in the long term. Working through a few questions with them is the first step, but try to use a proper screening service that’ll give you some insight into their credit and rental history, if they have any.
Letting a Student Property? You’ll Have a Higher Turnover Than Most
If you’re renting out to students, and you live in a city that has a high student population, you’re going to have a higher tenant turnover.
This is a natural fact of letting out to those in higher education; when terms end, many tenancies do as well. That means tenants will be coming in and out of your property more often than average, and that can make generating a healthy profit much more difficult.
However, you can turn to student housing turn services to help alleviate the pressure of a market like this. If you can get the property ready for a new student tenant only days after the old tenant graduated, you can get your rental back on the market ASAP.
That cuts down time between tenancies, meaning less of a profit gap, and ensures the place is always in move-in condition.
Repairs Will Be Needed
There’s no way around this. If you’re taking on tenants within your property, you’re going to need to fix things up from time to time. No home gets away scot free when there are residents!
These repairs could be relatively minor, such as needing to replace a bathroom vent fan, but they could also be rather major. Anything from a burst pipe to a full on kitchen fire count in the latter category, especially if you do not act fast.
Make sure you act on repair calls as soon as your tenant puts them through. You should also make the tenant aware that inspections will be needed every now and then, to ensure everything is in proper working order.
Making a Good Income as a Landlord
Letting a property can make you some good money in the long term. Even when paying off a mortgage at the same time, or having to pay an agent’s fees on top of that, you’ll still have extra cash in the bank at the end of each month.
To ensure this, make sure you’re aware of what else could affect your profits. Problems with tenants, repairs and maintenance, a lack of research – all of these factors can impact your investment and lower its value.
