So You Want to Be a Landlord?
Today I rented out my condo in Brighton. Every time I visit a great investment property it makes me want to own more and more. The way I feel about real estate is the way I feel about books – you can’t have too many.
But unlike books, investment properties can be demanding in way and at times which are inconvenient, and they can’t be ignored. They can sap your energy and money, and this illiquid asset can sometimes feel more like a liability.
Are you thinking of becoming a landlord? For some years I’ve advised so many people to hold on to their property if they can afford it. Selling often made for a loss sellers were not ready to take. But before potential sellers make this decision, I would have them really consider the responsibilities of being a landlord.
Lets start with finding a tenant. The best way is to work with local agencies specializing in renting, and hope the timing is good enough to find someone who will be a good tenant.
Next, you need to be realistic about the rent. My recommendation is to go just below what all the other ads advertise for a similar home, and find a better tenant. It will cost less than the risk of having an unreliable or destructive tenant.
So you found a tenant, signed a lease, paid the agent who found this tenant. Now what? Be ready to let your home go, and start thinking of it as an investment, rather than your home. For me, this meant painting my very beautiful turquoise kitchen a boring off-white, and I had to get used to the idea that the woodwork will not be the same next time I see it.
Your wonderful new tenant moves in, you’re getting paid monthly, and it is all bliss until something needs to be fixed, something else falls apart, the building has issues, and there is a special assessment in the condo complex. But you take care of it all and you are happy to be covering the mortgage with the rent you receive. Then you get a 30 day notice to vacancy. Get ready to go through it all again…
You start to show the investment property again to all these prospective tenants, only to find out how your former home is not treated the way you would have treated it. Some things are broken, some are scratched, and the appliances are not as new as you remembered.
Once a tenant moves out, you need to repaint, fix and scrub before the new ones moves in. No big deal? Maybe sounds like fun? Well, often there is just a few hours to do it. This year I was extremely lucky with two days.
This scenario is the best you can hope for. The bad things that happen include real serious damage to the property and not getting the rent. In some States this means immediate eviction, in Massachusetts it means losing a lot of money.
All this being said, I love it! Owning investment property is one of my favorite aspects of the real estate world. Although I only break even on this condo, it is worth holding on to it. But I know this is not for everyone.
It is imperative to be a good landlord if you are to find good tenants. For this you need to be okay with all the hassles and the risks, the inconveniences, and the demands. Just know what you are getting into.