Maybe you’ve thought about buying rental property. Wouldn’t it be great, you think, to own something that someone else pays for? It can work out that way, with your property increasing in value while you pocket money every month. But with the wrong home, the wrong tenants or the wrong management, it can go horrendously sour. Here are eight ways to make your first venture as a landlord a successful one.
Start small. Buy a single house, townhouse or condo rather than an entire apartment building.
Decide how much work you’ll take on. Are you a DIYer? Can you make minor repairs yourself? Are you willing and able to recruit tenants and deal with them on an ongoing basis? If this isn’t you, you’ll be wise to hire a property management company to handle these items.
Really, really, understand your income and expenses. Project them forward 5 to 10 years and make sure you have a margin. There’s more than mortgage, taxes, insurance and utilities. There also can be landscaping, pest control, landlord insurance and minor repairs. Be especially aware of big ticket items. If you’ll need a new roof eight years from now, set aside for it. Be aware of property tax trends so you won’t be caught be surprise. Consider what will happen if a tenant leaves and your property is vacant for several months.
Arrange financing in advance. Most mortgage lenders will pre-qualify your loan. It helps close the deal if you can show this to a buyer.
Know the neighborhood. If you’re not familiar with it, drive around. Talk to people. Research it online.
Learn how to be a landlord. Talk to other landlords. Join a landlord’s association. Familiarize yourself with tenant rights and local regulations.
Know your tenants. The right tenants can make your experience a joy and the wrong ones can make you rue the day you got into this business. Use a screening service. Have a written lease ready to go and specify exactly what is expected: when the rent is due, what the grace period is, what’s the penalty for being late, who pays utilities, what - if any - maintenance the renters are required to do. Insist on prompt rent payment right from the get-go. No matter how much you like your tenants, it's imperative to keep the relationship professional. Visit your property from time to time. You’re not permitted to barge in, but a drive-by can tell you a lot.
Keep business and personal finances separated. Maintain separate bank accounts and credit cards. Be clear on which is which for record keeping and tax accounting.
People have put children through college and financed their retirement through rental property while also working at paycheck jobs. But being a landlord is not for the timid, the inflexible or the careless planners. Think before you make the leap, and if you decide to go for it, all the best!
As a lifelong resident of Litchfield County, Heather is quite familiar with the beautiful Northwest Corner of Connecticut. In partnership with her husband at Turri, Inc., in Torrington, she managed and grew a 30+ employee electrical contracting firm that served both the residential, commercial and industrial industries. Currently residing in Goshen she hopes to transfer and utilize many of the skills she learned in contracting to the real estate industry.
Knowing how a vital community relies on its volunteers, Heather spent many hours in several capacities at local organizations that she admires. She serves on the Woodridge Lake Finance Committee and House Committee, Victoria Court Condominium Association (secretary) and Educating Canines Assisting with Disabilities (volunteer and nursery mom). Heather has also been involved with Goshen Community Care & Hospice (president of board of directors), Warner Theatre (board of directors), LARC (volunteer), Festival of Trees (founder), the Northwest Chamber of Commerce, and Goshen Business Circle. Heather also served as Vice President of Woodridge Lake’s Board of Directors.
In Heather’s spare time, she enjoys spending time with family usually in an active way by playing tennis, golf, boating, hiking and skiing.
Heather is honored to be a part of the E.J. Murphy team and hopes you will contact her with any of your real estate needs.
