There are many reasons people become landlords and often it’s not because they’re looking to make money as you and I are. We know that people become landlords because they move for a new job and can’t sell their house, or perhaps they’re going through a divorce and need to downsize, but again, they can’t sell their house and are forced to rent it out.
Well, if you ever happen to run into any of the situations above or have family and friends in these situations (I do) here’s what you might want to do: First off, landlording is easy, however it is also a job. If you’re the type of person that wants nothing to do with dealing with tenants then you should absolutely go out and hire a property manager.
Yes, a decent property manager is going to cost you about 10% of your monthly rent, but it will be well worth it. After all, if you try to do it yourself and don’t put in any effort, you might end up with deadbeat tenants who destroy your house and live there rent free because you’re slow to evict them.
By the way, to find a good property manager talk to other investors you know.
Also, go to your local REIA meetings and see if any property managers attend, and see who the successful investors at your REIA recommend. But if you really decide that you want to try your hand at landlording and don’t want to hire a property manager I would make sure that you’re going to be close to the property.
If you’re relocating to a job in Indiana and your house is in Florida, don’t try and manage it yourself. I think it’s pretty much common sense that managing your house several states away would probably end badly.
Next, take your time finding tenants and promise yourself that you’ll have patience until you find someone that meets your criteria. In other words, you should have written criteria of who you’re looking for. For instance, the person must have an income of $4,000 a month. They must have a credit score of 600 or better and they cannot have any previous evictions on their record.
Once you establish these criteria, keep your emotions out of it.
It doesn’t matter if the person is “nice” or “funny” or you like them, if they have a credit score of 400 and 5 evictions in their past then they should not be getting in your house. Also, get ready to interview several people. You may have to go through 35 people before you find a tenant that meets your criteria and you find someone that you’d want to live in your house.
Heck, even if it takes 50 people it will be well worth it because as the saying goes, it’s much better to have a property sit vacate than have one full of non-paying tenants who are making your life a nightmare.
Once you do find a tenant, make sure you use the proper paperwork. This is a whole other article in itself, but make sure you have an iron-clad lease agreement and consult a lawyer if you have any questions at all.
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