Considering buying to rent? Then you’re about to become a landlord. Ask yourself these questions first!
Do you know how to advertise?
When you decided to get into buying property to rent it, I doubt you thought you’d have to know anything about marketing. But let’s face it: you’ll want as many people as possible to get their eyes on the property vacancy you have, right? Of course, a lot of people will want to work with a lettings agency and be done with it. But you could save money and become more invested in the process by taking on some marketing responsibility yourself.
Are you ready for the time commitments?
Maybe no-one’s told you yet, but being a landlord can be very time-consuming! A lot of people completely underestimate this part of the job. They think that once they’ve got the tenants in they can just sit back and let some passive income roll in. Wrong! I’m guessing you must have had to have dealt with a landlord at some point in the past. They’re often very busy, and you’re usually piling a bunch more tasks to their big pile of tasks. You have to be willing to commit all of that time to the job. Unless you use a property management agency. This is kind of like “outsourcing” the landlord job, which can work better for everyone involved. Check out Froerer for more information.
Have you got the contracts ready?
Sure, it’s easy enough to find landlord and tenancy agreements online ready to download and print off. But you may have a lot of specifics for your property that you need to add to it. You should get legal matters like the contracts drafted up as soon as you can. Rental agreements are often a lot more complex than people think. And they’re one of the most important parts of the whole endeavour. You can’t afford to make mistakes with it.
Do you know what kind of tenant you want?
There are a lot of factors you’re going to have to think about. What age is your target tenant? What kind of career are they likely to have? Everyone is in a socioeconomic group – which one is your target tenant in? Are they likely to need public transportation? All of these questions are going to affect the type of property you invest in, the marketing you use to look for tenants… They’re big and complex considerations, but you can’t afford to skip them.
Have you decided what you’ll do if property prices increase?
Property prices are increasing all the time. One of the main reasons for this is that landlords starting raising rental prices in order to make more profit. This creates a domino effect. Surrounding landlords will take it as a sign that they can do the same. The question that you have to answer, of course, is this: will you raise rental prices because nearby landlords are doing so? It may bring you more in line with the money others are bringing in. But it could be incredibly unfair to the tenant.