Is Becoming a Landlord the Right Move for You?

AD. There are plenty of ways to earn more money in modern life. You can pick up a side hustle, change your career, or lean into your investments. Speaking of investments, one of the most common and beginner-friendly ways to invest your money is in real estate. As a physical asset, real estate is a relatively stable investment. It’s possible to earn a passive income if you have a property that you can rent out to someone. However, becoming a landlord involves more than just buying a property, renting it out, and then forgetting about it. You do have responsibilities and it does involve some work, as well as dealing with clients. So, is this the right financial move for you?

_{[Photo by Maria Ziegler on Unsplash]}

Buying a Property

If you want to become a landlord, first you need some property that you can rent out to tenants. While with most investments, it’s not recommended that you take out a loan to cover the investment, real estate is different. A mortgage is a special loan designed for property, and if you get a mortgage with decent interest rates, you can use the rent payments to pay the mortgage and also provide a passive income.

However, in order to get a good mortgage, you need to have a credit score that mortgage brokers can trust. Whether you’re a first time buyer or you’ve bought a home before, this means that they will run a credit check and give you a maximum mortgage according to your financial status.

If you’re able to offer a larger deposit, then you might get a better deal on your mortgage as well. 

Make sure that you look for a property that suits your needs as a landlord. You don’t want to start with a massive house that will be hard to manage or a project build that needs major renovations before you can legally rent it to someone.

Ideally, you can buy a property that has some minor cosmetic issues that are cheap and easy to bring up to date, because you can get a better deal. But remember that the longer you work on a property, the longer it will be before you can earn an income on it.

Finding Tenants

So you have a property that is ready to go, what next? The next stage is to find someone to live in the property. 

Before you look for tenants, think about the rent rates in the area of your property. Ideally, you should do this before making a purchase, but it’s good to keep an eye on it all the time. You want to set competitive rental rates that will still provide enough income to pay your mortgage, cover any other costs, and leave you with a profit.

Once you know what you’re going to charge, you can start a conversation with potential renters. Letting agents can connect you with appropriate tenants, cutting down on the amount of time you have to wait to earn some money. Use a service local to your area, so if you own property in Chester or the surrounding area, use a Chester Letting Agency. This will connect you to the correct people.

Make sure that you find trustworthy clients as well. Ideally, you want someone who is more likely to pay their rent on time and won’t trash your property while they stay there. Factors like their renting history can help.

Managing Tenants

So, you have your tenants in your property. Do you just sit back and relax?

Well, no. The problem with people is that they can be unpredictable. Finding the right tenants can help, but you still need to keep on top of issues that might crop up. 

For example, if someone can’t pay their rent on time, you can’t just evict them right away. This might not even be the best solution anyway. After all, if a tenant is usually reliable but has a difficult month, it might be best to be gracious and maintain a good relationship with them. After all, a good tenant who has an odd problem is much better than someone who rarely pays their rent on time, if at all.

If someone doesn’t pay their rent at all, you will have to get a court order to evict them. Typically you will also have to wait 8 weeks or 2 months before you can evict them. 

For this reason, it’s best to have an attorney on hand when managing tenants. An attorney can provide you with legal advice to make sure that you don’t inadvertently go against the rights of your tenants, but they can also help you if you have to get the courts involved.

In an ideal world, you don’t have to involve the courts. Have a conversation with your tenants first to determine how serious the situation is. This is also true if you want to evict your tenants for another reason, as you have to make sure that you follow the legal processes and give them enough time to leave your property. 

Maintaining the Property

One of the most important responsibilities of a landlord is to make sure that the property is well looked after. Your tenants aren’t responsible for repairs and maintenance jobs, and often can’t make major changes to the property anyway.

If you don’t look after the property, your tenants have every right to stop paying rent, because you need to keep the house habitable for them. 

There are a few ways to maintain your property. First, make sure to conduct regular checks of the property. This does a few things. It checks for basic wear and tear damage, and for things like the boiler, gives you an opportunity to make sure they are well maintained. But it also allows you to check that the tenants haven’t damaged your property.

Another way to maintain your rental property is to ask your tenants to contact you if there are any issues. They will often want them fixed quickly, and it’s in your best interest to do so.

If you are doing checks on the property, you have to inform your tenants before you come and give them a lot of notice. Keep them informed about any maintenance workers you send their way as well, so they know what’s going on. 

Renting Multiple Properties

So, you’ve successfully rented one property out and you’re enjoying a regular passive income. What now? Many people are happy with this, and often the property they rent out is one they used to live in and haven’t got around to selling. The rent covers the costs of the property and provides a little bit of pocket money.

But if you want to make more money as a landlord, it’s a good idea to repeat the process. You are obviously tied by your finances, as you have to buy a house in order to rent it out, but you can slowly build up a good portfolio this way.

If you’re managing multiple properties and a lot of tenants, it might be an idea to involve a property management service. They will be the go-between for you and the clients and they will help you manage more people and more houses. This way, you don’t fall behind on repairs and you can make sure that your tenants don’t fall behind on rent.

Over time, this will provide a significant passive income, as well as physical assets that you can sell in the future.