Did you end up becoming a landlord accidentally? Maybe you moved into a new house and decided to turn your old home into an investment property. Or, perhaps you needed some cash flow and decided to rent out your spare bedroom. Regardless of what led to you becoming a landlord, it’s a challenging job if you’re unprepared.
This article will help you meet those challenges and become a successful and profitable landlord. Everyone defines success differently, but most would agree that the following points constitute success:
- Your tenants are happy
- Your tenants pay rent on time and in full
- Your tenants are reasonable and responsible
- Your property is in good shape
- Your rental income has you on track to become profitable in a reasonable amount of time
These are just some of the points landlords consider signs of success; your mileage may vary.
No matter how you define success, the following strategies will help you get there.
1. Hire a property management company
This is the ace in every landlord’s back pocket. If you’ve become a landlord accidentally, you probably didn’t expect the job to be all that difficult.
If you don’t enjoy tedious landlord duties like collecting rent, handling tenant issues, and scheduling maintenance and repair jobs, you’re not alone. Successful property owners use property managers to handle everything from the minutia to the big tasks to take it all off their hands.
Since property management companies are experts in their field, they know how to find good tenants, keep tenants happy, and make sure your property remains in good shape.
2. Consume educational video content
Most real estate investors have a blog, but many also have a YouTube channel. If you haven’t subscribed to property management YouTube content, now is the time to dive in deep.
Start watching educational video content created by experienced real estate investors and landlords. For example, subscribe to the BiggerPockets YouTube channel for advice on being a better landlord. BiggerPockets is one of the largest, most trusted resources for landlords and property investors on the internet.
3. Be flexible and willing to work with your tenants
Part of being a successful landlord requires being flexible enough to work with your tenants. It’s easier to keep a good tenant by bending the rules when they need some help than it is to find a new tenant.
You may need to be flexible in the following ways:
- Your tenant might need an extra week to pay the rent
- Your tenant might need to pay their late fee in installments
- You may want to waive a late fee for your tenant just once
- You may need to accept a check or money order for rent instead of a cash
When a tenant tells you ahead of time that they need extra time to pay the rent, that says a lot about that tenant’s integrity. That’s the kind of tenant you want to work with because they’ll be more likely to pay the rent plus the late fee. When a tenant tells you in advance, it shows that they care about their relationship with you.
4. Keep good books
Whether you’re renting a single room or an entire house, keep accurate financial records. Make sure you’re not digging yourself into a financial hole. For example, say you’re renting your property to a friend. If your property taxes are $5,000 per year and you’re only charging your friend $300/month rent, you’re losing $1,400 per year.
Keeping good books will show you where you’re losing money. If you don’t want to continue losing money, it’s time to raise the rent and stop giving your friend a deal.
5. Check your mortgage terms
Your mortgage may prohibit you from renting out your home unless you’re living in the home and just renting out a room. Check with your lender before renting your property to make sure you’re acting within the terms of your lease. If you rent your house against your mortgage terms, you could end up in foreclosure.
6. Update your insurance policy
There are different insurance policies for rental properties. Your current insurance may only cover your home when you’re living inside. If you don’t convert your insurance policy to a landlord policy, any future claims may be denied.
7.Stay on top of your taxes
Technically, all rental income is taxable income. It doesn’t matter if you’re renting a room or a house; all rental income must be reported to the IRS.
The good news about having to report rental income to the IRS is that you can also report landlord-related expenses to lower your taxable income.
Do your best and don’t stress
If you become an accidental landlord, do your best to maintain harmony with your tenant(s). If the job becomes overwhelming, hire a property management company to avoid feeling stressed. You’ll find the sweet spot of success when both you and your tenants are happy.