Whether you are looking for a place to invest your money, a way to earn extra cash on the side, or even looking for a new career, real estate investing could be the right opportunity for you. Looking at real estate as a whole can seem daunting, but, when broken down into simple terms, anyone and everyone can invest in real estate! The hardest part is simply starting. Here are five ways to get yourself on the right path to becoming a Landlord.
1. Landlord Research and Education
This is easily the most important step to starting a successful career in any type of real estate. At most businesses, you typically are not thrown into working on your first day. They spend time training you and making sure you understand the business and your role before letting you do things completely on your own. Well, real estate is the same. You do not want to be thrown into something you know nothing about. Take the time to understand real estate and the different aspects of it. Things you want to understand before jumping in would be:
- Different types of real estate (multi-family, single family, small apartments, etc.)
- Different ways to finance real estate
- Rental Income (the amount of money that a property brings in)
- Expenses (things you have to pay)
- Operating Income (Rental Income – Expenses)
2. Creating a Concrete Plan for Being a Landlord
Once you have a good understanding of the ins and outs of real estate you can start to generate your own plan. “Decide where you want to start, how you will finance buying a property, and what your long-term goals for your business are,” advises Lori A. Nery, Owner/Broker of Coastal Realty. A good idea, especially if you plan to be working with a partner, is to physically write these plans out. Your plan should be a guideline that you can refer to throughout your real estate career to help you stay on track. Therefore, when making your plan, be very descriptive and include what your long-term goals are. Questions to address this should include:
- How much do you want to invest?
- How much of a return would you like to make?
- How many properties do you plan to own?
- How many hours do you want to put in?
Keep in mind, this is just a guideline and, at times, your business may stray from your original, plan but in the beginning stages it will help you to stay on target.
3. Finding the Right REALTOR® Who Works with Landlords
A REALTOR® plays a very important role in your success, so finding the right person for you is a critical step that you should not look over. The best way to find the right real estate agent is to get referrals from your friends or people in your area. You want someone with experience and someone who people have recommended. A good place to find out more about a REALTOR® is to look at their testimonials. You also want an agent who is working for your best interests. At Coastal Realty, all of our REALTORS® operate under our Pledge to Buyers.
In becoming a Landlord, your REALTOR® not only has to find you a property, but you may also want him or her to find the tenants to fill it. Make sure that agent is someone you can trust and that you feel has your long-term goals as a focus.
4. Becoming a Landlord
Once you have a good REALTOR®, you can then go about finding your first property to rent out. Be patient in this step. You do not want to be stuck with the wrong house so take your time finding the right one. Understand that some properties are going to need some renovations and DIY skills, so you will likely have to put some money into the house after purchasing it. Start small and work your way up from there.
5. Finding the Right Tenants
When choosing a tenant for your property remember that these are people you are going to be dealing with a lot. They will be the people living in your property, which is now a business. Decide which type of tenancies you would like to honor and understand that tenancies have different rights. Make sure you know what rights they have. Visit Mass.Gov to read more about tenants’ rights. You need people who are stable and financially responsible. “Set the criteria of what would be expected of your new tenants before you find them. This way you have a guideline you can refer to while you are searching,” says Lori. Before committing to any tenant, they should complete a rental application or authorize a credit or background check. Do your due diligence, call references or hire an agent to do these steps for you. Armed with this knowledge, make an informed choice of someone you feel like you can trust and who is going to respect you and your property.