“Checklist for How to Make a Living with Rental Properties” written by Mike Marko
Do you want to know how to make a living with rental properties?
Most experts say that the first step to real estate investing is starting with rental properties. This is because learning how to make a living with rental properties is considered entry-level investment in real estate.
However, learning how to make a living with rental properties can sound complicated for beginners. It’s still real estate, after all…
And in real estate, you could lose more money than you’re earning if you don’t understand what you should be doing.
I’ve seen people struggle with how to make a living with rental properties. So, as someone who has struggled in the past as well, I’ll share tips on how to make a living with rental properties that I wish I had known sooner.
Making a Successful Rental Property Business
Now, learning how to make a living with rental properties isn’t easy for everyone. Being a landlord isn’t a job for everybody, either.
However, you can learn how to make a living with rental properties by being smart about it.
Think of it this way: the demand for real estate continues to rise every year. People are also more inclined now to rent a property rather than buy one, which means you won’t have difficulties finding tenants.
So, if you want to be smart about how to make a living with rental properties, you need to remember a few things. Let’s start with knowing your market.
Know Your Market
Now, an important thing to remember when learning how to make a living with rental properties is that different tenants have different needs. With this in mind, your type of property will dictate what kind of tenant you attract.
For condo units, you will most likely attract single professionals and small families. Commercial spaces, however, attract business owners who are looking for rental properties in which to set their offices.
Since your tenants will often vary, you need to learn more about what your target market would want to find in your property. For example, the expectations of a large family will be different from those of a single tenant.
This applies to how much space there is and how much furniture comes with it, too. For example, larger spaces will most likely attract businesses or large families rather than single tenants.
While you’re at it, you should consider the location as well. This is because landmarks are outside components that you need to think about in order to market your rental space properly.
For example, professionals would want to rent near cities where they can be near their jobs. Families, on the other hand, may want to consider a property within a gated community or near schools.
Prepare Your Budget
While learning how to make a living with rental properties, you’ll realize that it doesn’t involve buying materials and creating products. However, your budget will still be used to maintain the quality of the property and facilities you’ll offer your clients.
These facilities could include common areas such as parking lots or even hallways. These seemingly small details can greatly affect a person’s decision to choose your rental property.
A well-maintained property can earn better and longer patronage from tenants. Think about it—good tenants will most likely want to stay in a rental property that is well maintained.
A well-maintained property is also crucial to how to make a living with rental properties even if it’s empty. This is because it’s going to attract possible tenants much faster than a run-down property of the same size and type.
Keep Everything in Writing
Another thing to remember when learning how to make a living with rental properties is the importance of documents. This is mostly for legal reasons.
With this in mind, you should always have copies of important documents such as an official and signed lease agreement. Even agreements you’ve made with specific tenants should be kept in writing.
These documents will help you maintain order. They can also be used for legal recourse if your terms are not met or are violated.
If you have complete and well-made documents, you may actually find it easier to find ideal tenants who will follow your terms. This is because these documents show your professionalism and reliability as a property manager.
Perform Complete Background Checks
Now, the biggest mistake that a landlord may commit is letting an unqualified tenant rent their property. This will undoubtedly cause problems in the long run and might also come back to bite you later on.
Therefore, it’s important to double-check if possible tenants fit your requirements. If you have to, always have a copy of your requirements and use it as a guide to help you with your background checks.
You can also go through key requirements with your tenants while you talk to them. This will also help you see if what they say to you matches what you find out about them in your background checks.
What should you look for? Their credit reports, for one thing, to see how well they manage their finances. Another key point to check is if they are employed. This is in order to ensure that they can pay for rent.
You should also check if they have been evicted in the past. Doing so will give you an idea if they are fit to be your tenant.
Maintain a Positive Cash Flow
As part of how to make a living with rental properties, you will be earning money from your tenants. However, you will also have to pay for the upkeep of your property.
With this in mind, you need to make sure that the money going out isn’t overshadowing the money going in. Don’t let maintenance costs go over your head just because you’re confident that there will still be money coming in from your tenants.
If you observe that the rent you are collecting is more than enough to cover expenses, then that means that you have a positive cash flow. As someone learning how to make a living with rental properties, this is the state you want your cash flow to be in.
Fulfill Your Duties as a Landlord
Lastly, you’ll fully learn how to make a living with rental properties if you learn how to be a good landlord. This means that fulfilling your own duties as a landlord can encourage tenants to fulfill duties on their end.
You should always remember that having a rental property is still a business. Therefore, you should also follow the arrangements that you set with your tenants.
You definitely don’t want to be a bad landlord with good tenants. This will cause nothing but problems and everything you’ve learned about how to make a living with rental properties will go out the window.
Commonly, landlords are responsible for the maintenance and repair of the property, as long as the damage isn’t caused by a tenant. This includes damage that’s caused by time or weather.
It could also be part of the landlord’s responsibility to provide assistance for the tenant when repairing the damage that they have caused. This could include providing contact details for repair services that you trust to do the job.
Landlords are also expected to abide by the terms they’ve set for paying rent. This includes following the provided grace period before implementing additional fees.
Final Thoughts on How to Make a Living with Rental Properties
Becoming a landlord can be much easier said than done. However, that doesn’t mean that there isn’t a way to make learning how to make a living with rental properties easier.
Just remember that you need to think about your market in order to make it easier for you to find tenants. You’ll have a hard time making money if you keep pursuing single tenants for commercial properties, for example.
Documents and background checks are also very important in order to not run into problems in the future. Learning how to make a living with rental properties is your business, so you need to take precautions in order to protect your business.
Your budget is also very important for your business. The maintenance of your business can’t be shouldered by rent from tenants alone.
Lastly, you need to learn how to be a good landlord while you learn how to make a living with rental properties. This is because your business is more likely to fall if you’re the one with shortcomings.
So, with this checklist in mind, you can get a head start in learning how to make a living with rental properties. However, if you still have questions, feel free to reach out through the comments.
1. Guide On How To Start A Rental Property Business
2. Sample Credit Report
3. Property Manager’s Guide In Creating A Tenancy Agreement
If you need help marketing your business online then check out IM Consultant Services.
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