Buying real estate is once again considered to be a good investment. Home values have bottomed out long ago and have been on the rise for the past 2 years now. However, there are still good deals out there if you have a good realtor on your side. There is still a long way to go before we’re back to a normal housing market. Smart investors sensing this great opportunity have their ears to the ground ready to pounce when the right property comes along. Right now, the overall real estate market provides the perfect conditions for buying properties and renting them out.
Being a landlord can potentially be a very lucrative business to be in and if done correctly, you could be receiving a steady stream of income from enough rental properties to make a very comfortable living. If you’re a new investor wanting to get into the business of being a landlord then there are some key things you need to know before you move forward.
1- Have your funding in place- Great deals on real estate don’t last long so make sure that you have your funding in place and ready to go. Sellers love cash investors because they can close quickly [usually within 3-7 days]and with no headaches. This is why cash buyers get steeply discounted prices. Most of the time, a motivated seller would rather lose a few grand off the purchase price for a sure thing, than to wait and see if a bank will approve a potential buyer for full asking price. Whether you’re a cash buyer or you need a loan, make sure that your funding strategy is in place before looking for investment properties.
2-Buy for the right price- The first step to being profitable as a landlord is to buy the property for the right price. You must enlist the help of an experienced real estate agent in order to do this. The agent should then send you several listings according to your budget and criteria. It’s also a very good idea to get a feel for pricing in the neighborhoods that you’re looking in. This way, when a good deal comes along, you can feel confident about submitting an offer without the slightest hesitation which will give you a better chance at getting the deal.
You can also find a great deal by buying a short sale property. It’s important to know however, that negotiating a short sale property can sometimes take several months before you’re able to close on it and there’s never a guarantee that the bank will accept your offer.
It’s also OK to buy a property at fair market value as long as you’re able to still make a positive cash flow every month. It’s absolutely crucial that you know what your monthly overhead will be on a rental property so that you can compare this number to what the rental income will be.
3-Take advantage of historically low mortgage rates- If you’re not able to pay cash for a property, you’ll have to get a mortgage. Right now banks are offering some of the best mortgage rates that we’ve seen in a decade. For people that qualify, it’s a great opportunity to lock down a 15 to 30 year fixed mortgage at insanely low interest rates.
4-Consider hiring a property management company- Having years of experience of being a landlord myself, I can tell you that it’s not for everyone. Landlords have to deal with not only the maintenance of the property but they also have to be available to the tenants in case of an emergency situation. This can be a headache especially when you have a demanding tenant on your hands.
I would highly advise you to find out how much a property management company would charge you to take over the role of landlord. How great would it be to turn all your landlord duties and responsibilities over to someone else and all you have to do is collect a monthly rent check? As long as you’re able to work the cost into the monthly expenses and still make a profit, then you’re golden!
5- Know the Eviction laws- If you plan on being in the rental business for any amount of time, then you should be prepared to do an eviction or two [at least] depending on how many rental properties you have. It’s important that you get very familiar with your county’s eviction laws so that you know exactly what the procedure is and you don’t waste any time. I can tell you that I’ve done at least six or seven evictions in my time and it’s absolutely no fun at all. Not only that, but it’s very time consuming. Don’t get me wrong…you can do an eviction on your own but you have to make sure that the paperwork along with the fees get filed exactly the way the courthouse asks for it. If the paperwork gets filed incorrectly, then you may have to start the whole process over again [I know this because it’s happened to me]. That’s why these days when I have a tenant that stops paying me rent, I just turn it over to my attorney. Remember, every day that a rental property sits vacant means money out of your pocket.
Through experiences that I’ve been through in my 8 years as a landlord I wrote this guide to help aspiring landlords to avoid making some of the same mistakes that I’ve made. By following these basic steps without diverting from them, you will be on your way to being profitable as a landlord. This has been my guide to being a successful landlord.
John Conde Orlando Realtor, Short Sale Specialist with http://orlandorealtyconsultants.com/ He has been buying and selling Orlando real estate since 2004. He is devoted to helping people that are facing foreclosure and financial hardship to find solutions to their real estate needs.