What You Need to Know About Being a Landlord

renting out property

 

Venturing into the real estate industry without a thorough grasp of business planning is as risky as jumping out of the window without a safety net. Rental property is the primary business for many people. If you should take any relevant action of this nature you must plan carefully.

The first step in any business planning is to understand what you want to do. Some people start a business without a clear path. They wander around and soon find themselves burned out and with no where to start. This occurs because they lack a definite goal.

So where should you begin? Before venturing into the rental real estate sector you should have a clear idea of what you want from this occupation. Is it short-term rental? Are you in the rental real estate business for the long-term? How much do you earn per rental unit? How much are you willing to spend? Depending on these factors, you can reasonably determine how much rental income you will need to break even with all costs for your business. Part of your business plan for rental property should be a planned marketing budget. You’ll need to spend money to run rentals, but you’ll want to budget a reserve for unexpected repairs and maintenance costs. So you’ll have to give careful thought to how you can calculate this loss and determine if it’s realistic in the financial outlook. The first step is to come up with a preliminary marketing plan.

Marketing Your Property Yourself

It’s wise to place the burden of marketing yourself on a qualified real estate agent. Make a list of reliable agents and contact them directly with a proposal. There’s no need to try and impress a potential client. Simply let them know that you are looking for a property in their desired area with specifics – pool, fenced yard, outdoor living pergola, fireplace, etc.. Unless you’re in the business of leasing, you won’t need to hire an agent. But as you may have discovered, hiring a property manager is not cheap. You’ll want to have a solid financial base for your business to be taken seriously. Consider it a necessary expense.

Selling Purchased Properties

The most logical solution to this problem would require you to sell your rental properties. One way of doing this would be to set up separate accounts and deal with properties directly. A realtor will place your properties on the Multiple Listing Service (“MLS”) database for all to see. Once it’s on the MLS property find an agent to work with who will also find interested parties and negotiate the sale on your behalf. In today’s internet world this is the easiest way to sell a property. “Buying and Selling (Probate) Properties” web page is a good source to refer to. You may even place a small ad in your local newspaper.

Failures

This is not a market for the complacent. However, as with any industry there are many who go in with the intention to buy and sell properties just like you. Unfortunately some are very good at what they do or may even be very skilled at it. You need to carefully watch them and watch them carefully. Even successful “flippers” will fall and get injured. Remember that even a seemingly likable character could be behind you in the streets if you make one wrong move. Bottom line: Live where you live.