Are you envisioning becoming a landlord either by buying a piece of property or inheriting one? Real estate is a more secure form of entrepreneurship than investing in the stock market. Yes, collecting rent and knowing that you won’t lack a few bucks in your pocket at the end of every month is enjoyable. However, being a landlord is hard work, and not everyone is cut out for it.
If you do not know anything about managing a property or the real estate industry, jumping right into being a landlord can lead to losses and stress.
Below is a step-by-step guide to being a successful landlord.
Step 1: Do Your Research
The real estate industry has its ups and downs. To become a successful landlord, you need to know what being a landlord entail. The first thing you need to do is comprehensive research.
Researching will help you understand the market, the rules that govern the industry and the responsibilities you will have on your shoulder once you become a landlord.
- Local Landlord-Tenant Laws – Research will enable you to familiarize yourself with the local landlord-tenant laws. These are the laws that dictate your responsibilities as a landlord, the responsibilities of a tenant, the relationship and transactions between a landlord and the tenant.
- Local Market – Understand the local real estate market before investing. Find out which units are popular, the rental prices, profitable properties to venture into, and the best location to purchase a property.
Step 2: Scrutinize Your Tenant(s)
The tenant your get for your rental plays a crucial role in determining whether you will become a successful landlord. Some tenants can be a headache and can have a negative impact on your cash flow.
The tenant screening process involves checking their credit score, past landlord references, ensuring they are employed or have a steady source of income, have no criminal background, and have zero eviction records. Even though this can be a long and tiring process, it is worth because it will save you a lot of problems.
Step 3: Draft a Lease/Rental Agreement
A lease agreement is a crucial document for someone in the rental industry. It is a legal binding contract that outlines the rights and obligations of both the tenant and the landlord.
Finding a good tenant is one thing, but keeping the tenant is another. A lease/rental agreement ensure fairness in the tenant-landlord relationship. The rental/lease agreement should contain terms and conditions, rental rates, penalties, deposit amount and policies.
Step 4: Hire a Property Manager
How you manage your property can be the reason for success or failure as a landlord. If you have a large property, numerous tenants to deal with, live far away from your rentals or have a tight schedule, you can hire a property management company to manage the rental property on your behalf.
Property management companies not only help in collecting rent, but they also screen tenants, handle maintenances, advertise a property, and draft leases. If you have a property in Canada, you can find full service rental property management companies in Toronto to help you manage your rental property.