If you are looking for a way to make a good income, and potentially grow the capital that you put into your business, becoming a landlord could be right for you. Across the world, literally millions of ordinary people are realising that they can make a reasonable living by buying a few properties, and letting them out. Many are collaborating together with friends and family to share the costs, and get started in this business.
Provided you have enough capital for the deposit, and some funds to bring what you buy up to spec, you can get started almost straightaway. In many places, for example most of the UK’s large cities, there is strong demand for rental properties.
Hands-off property management
By leaving the day-to-day management tasks up to an estate agent like Linley and Simpson, you can turn this into a hands-off business that can easily be run from home. You simply put in the funds to buy the property, and leave it up to the agent to find tenants, and manage the maintenance of your house or flat.
However, as with any business you have to do your research and buy wisely. It is particularly important not to pay too much for the property. You also need to study the current market in the area, and think about what is likely to happen in a few years’ time. The last thing you need is to snap up what looks like a bargain property, only to find out a couple of months down the line that a major employer in the area is in the process of shutting down.
You need to check local rules and regulations to make sure that you can rent out the property you are buying. It is also important to understand your responsibilities. In all likelihood, you will have to maintain the property to a certain standard, and provide your client with a list of facilities. Failure to do so can lead to your tenants taking you to court. Therefore, you need to understand the law and your responsibilities as a landlord. Fortunately, a lot of that information is easy to find online on websites like this one.
Understand all of the costs
It is also important to understand how much you are likely to have to pay out in overheads. In many parts of the world, you will need to pay for licences and inspections, as well as pay the agent and for rates, insurance policies and potentially other items.
Be realistic about the earning potential
The biggest mistake small property investors make is being too optimistic. They do not always work out how they will manage should a tenant not pay the rent, or the property remains empty for a few months.
Keep some cash reserves
It is especially important to have some money in the bank to cover the mortgage in this situation, or the cost of a large repair bill. The last thing you need is not to be able to pay the mortgage company, and end up losing the property.