Are you tired of living paycheck to paycheck? Are you hoping to build real, lasting wealth someday?
Then you need to start investing. And not just buying stocks here and there. You need to acquire rental properties.
Real estate has created far more millionaires in the US than any other asset class. And contrary to what you might think, you don’t already have to be wealthy in order to get started and become a landlord.
But what does a landlord do? And what does it take to buy and manage rental properties?
The answer to those questions is your ticket to building wealth. Read on below to understand landlord responsibilities now.
Landlords Buy, Rehab, and Rent Out Property
Wondering how to become a landlord? the very first thing that aspiring landlords do is acquire property. And this is the most important activity for real estate investors to focus on.
There is a lot that goes into buying a rental property. First, you’ll have to choose a target market. If you’re managing it yourself, it will need to be in your local area.
You’ll need to get prequalified for a loan. You’ll most likely get a conventional investment mortgage. This means you can expect to put down at least 20%. Check out this guide for tips on locking in financing.
Once approved, you need to find a good deal. This is far easier said than done, especially in a heated seller’s market. Most successful investors develop strategies for finding properties before they are listed for sale. It’s the best way to get in at a good price and ensure monthly cash flow.
Once you buy a home, you’ll probably need to do some work to get it rent-ready. The nicer the property is, the more you can charge. You’ll also attract higher-quality tenants.
Once it’s ready to go, you can list your unit for rent.
What Does a Landlord Do? They Market Their Units
Landlords then need to market their properties. The more people who see your rental unit, the more people will apply. This gives you the opportunity to pick the best possible tenant who will be kind to your property.
There are physical marketing methods, such as putting up “For Rent” signs in the yard and down the street.
But most strategies are digital these days. You’ll want to list your property on various websites. Some are paid and some are free. You can also list it on Facebook Marketplace.
During times when rentals are in high demand, this task is much easier, as renters are desperate and will apply to every new listing.
Landlords Screen Applicants
Once the applications start rolling in, you’ll need to field through all the applications and make a list of potential tenants. By using an online application system, it’s much easier to field applicants based on certain responses.
If you want tenants that are likely to stay two or more years, you can sort your applicants to show only those people, for example.
You’ll want to run a background check on potential tenants as well, and decide if a certain person is worth renting to or not.
Landlords Create a Lease Agreement
Landlords, usually with the help of an attorney, will need to create a lease agreement. This is a very important document that will either protect your success or ruin your investment potential.
Be very careful with how it’s written. You want it to benefit both you and your tenants. But you don’t want any loopholes that could put you in major trouble if something goes wrong.
Landlords Uphold Their End of the Lease
Your main job as a landlord, once someone lives in your unit, is to uphold your end of the lease agreement. The lease will dictate exactly what you, as the landlord, will and will not do.
If it says that you will complete repairs when something breaks, then you’ll need to do that in a timely fashion. If it says the tenant is responsible for repairs then you won’t need to.
Most of the time, when you own just one or a handful of units, there’s not a lot you need to do as a landlord. Once your units are rented out, it becomes mostly passive, unless you have troubled properties or troubling tenants.
Landlords Chase Down Rent Checks
Every landlord’s least favorite activity is chasing down monthly rent checks. Even if you approve the highest-quality tenant, there’s a chance they can either forget to pay rent or try to avoid it as long as possible.
It’s up to you to know how you are going to get your money. And the steps you will take should be outlined in the lease agreement.
For example, there might be a grace period of one or two days. By the third day, if rent isn’t received, a late fee will be charged to the tenant.
You can send emails, text messages, phone calls, and physical notes to your tenant to remind them.
But one of the best tips for landlords is to use an online rent collection platform.
By using an online portal that allows your tenant to pay rent with a bank account or debit card, it’s much easier for you and for them. They can even set up automatic monthly payments, and you can provide a monthly discount for doing so.
Landlording the Easy Way
Of course, not every rental property investor wants to have this list of responsibilities on top of their day job. It can be pretty time-consuming unless you make enough from your rentals to quit your job.
That’s why so many smart investors will hire a property management company instead. They will complete everything listed above (minus the buying and remodeling of the property) on your behalf.
Just pay a monthly management fee for each property you own and you’ll collect your rent hassle-free every month.
How to Own Rental Property the Right Way
So what does a landlord do? If they manage properties themselves, they do quite a lot. Most of it is before the unit is rented out.
But smart landlords will hire a property management company to handle all of this on their behalf so that they can instead focus on finding new deals and growing their portfolio.
Looking for more landlord tips like this? Head over to our blog to keep reading.
Also published on Medium.
