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!
Susan Shuxian Hu has been a dedicated realtor serving in Silicon Valley since 2010. With great passion, outstanding negotiation skills and due diligence, she has helped many buyers and sellers in their real estate needs. Living in West San Jose for more than 14 years, she has broad knowledge in Cupertino, West San Jose, Los Altos and Saratoga. She has enormous patience working with buyers and never tired of showing all possible properties that may fit client’s needs. Clients appreciate her best service to their satisfaction. She specialized in luxurious real estate purchase in Los Altos, Cupertino, Saratoga and Palo Alto. She also helped friend and past client’s referral working in San Francisco, Foster City and far reached Bay Area.
Susan Shuxian Hu was graduated in East China Normal University in Shanghai with bachelor and master degrees in Bio science. She came to US in 1989 and earned her Ph.D. in Molecular Genetics in Texas A&M University in 1996. After one year of postdoc in Southern Florida University in Tampa, she moved back to Orlando with her family and started working in Lucent Technologies. In 2002, Susan moved to California, Silicon Valley joined a start-up company. Since then she worked in high tech Corporation till 2009. Driven by her dream job pursuing, she found her passion working in sales by helping people in real estate after one year of education in De Anza business and real estate law study. Since then, she has been serving many people in Bay Area for their real estate needs.
With bilingual advantage, she has been actively working with Chinese immigrants as well as local engineers and residents. With rich high tech background and connection with Chinese community, Susan has served in luxurious real estate in last a couple of years.