4 tips for landlord wannabes
Late rental payments. Destructive tenants. Unexpected home repairs. Be prepared. These are just a few of the issues that can arise when you're a landlord.
Many homeowners are finding themselves accidental landlords after unsuccessfully trying to sell their homes or refinance. Their alternative is to rent out the home until the market gets better or refinance into a lower payment. However, what they don't realize is that being a landlord may not be what it's cracked up to be. While most landlords are lucky with placing a few Craigslist ads and finding responsible tenants who take care of the property and pay their rent on time, some aren't so lucky.
Here are a few things to be aware of and ways to prepare before becoming a landlord:
1. Reserve cash for the unexpected
Ideally, you should have at least three months of reserves. If your tenant decides to become a squatter and not pay rent, then you'll need to cover the mortgage yourself until the courts can resolve the case. Other possibilities include the home needing repairs or the property going unrented beyond when the next mortgage payment is due. Both those instances can put you in a bind having to pay the mortgage and related expenses until a tenant signs the lease.
2. Patience for tenant problems
Credit checks don't tell you if your tenants will become insufferable nuisances who'll call you at 2a.m. to rant about parking space issues. While you may luck out with someone who takes care of the property and even pays their rent on time, there's the off chance that personality issues may complicate the tenancy. You must be patient and resolute in how you'll manage these issues with the tenants.
3. Real estate team: attorney, Realtor and accountant
Having a team of professionals comes in handy when the above-mentioned tenant problems are in full swing. Squatters, dead-beat tenants, and damage to the property are just a few of the issues that necessitate the use of an attorney, Realtor and accountant. They can be helpful in negotiating the release of abusive tenants from a lease, finding new or replacement tenants and managing the finances as you move through these issues.
4. Reliable property management company and contractor
Property management companies serve as a buffer between the homeowner and tenant, which allows the homeowner to put aside having to deal with the daily/monthly issues related to managing a property. If there are repairs that need to be made, then you'll either want the property management company to have an in-house contractor or you'll want to have one of your own. Either way, you'll find that having a consistent and trustworthy contractor is a blessing as opposed to one you can't count on. Every penny matters so if using a property management company and/or contractor, then you'll want to make sure that you're aware of and in control of the related expenses.
As you might be starting to understand, becoming a landlord can sometimes be a headache and cost you money. Is it really for you?