As more individuals and families decide to rent instead of purchase a home, resourceful investors have a fantastic opportunity to improve their portfolios by obtaining a multi-family rental property. The rates are still very low for multi-family mortgages, and eligible borrowers can enjoy a number of different lending options to match their needs. However, one aspect that investors may not be prepared for is the idea of becoming a landlord. As a landlord, you have certain obligations to your tenants to fulfill the basic expectations outlined in any landlord-tenant agreement. If your tenants are not happy with the property or basic services you provide, they may decide to go elsewhere, which isn't good for your investment. So what are some of the basics you should know about being a landlord?
- Treat Your Investment like a Business: Your rental property is not a hobby to earn extra money on the side. Prepare yourself with literature on basic tenant rights, join a landlord organization, and learn the basics of home repair. If you don't treat your investment like a business, it most likely won't succeed.
- Don't Be Afraid to Hire Help: If you do have many other responsibilities and can't put as much time as you would like, hire a property manager. A property manager will typically charge a small percentage of the rent collected, but this may be worth it if you're new to being a landlord or if you have another job.
- Do Your Homework on all Tenants: Don't choose a tenant by an interview alone. Although an interview may be a good start to gauge the behavior and background of a tenant, this is not enough. Make sure to do criminal background checks and reference checks on all applicants. Tenant issues can be highly costly in the long run.
- Speak to Your Tax Attorney: Although the tax deductions aren't the same as they are with single home ownership, there are some possible tax benefits with owning a multi-family unit. Speak with your tax attorney to determine what you may qualify for and the requirements necessary to meet those benefits.
- Be Polite but Don't Be a Pushover: You should absolutely treat all tenants with respect. Treat tenants as you would any business relationship. However, maintain expectations for your tenants. If a tenant tries to argue for more time to pay rent, be stern with what was agreed on in the contract. Otherwise, your tenants will continue to cross the line to see what they can get away with. Be respectful, but don't let others take advantage of you too.
A real estate investment can be a very enjoyable and lucrative opportunity. A landlord is a full-time job that can allow you to see the biggest return on your investment. Therefore, make sure to do your homework on what's expected of you, what you should expect of your tenants, and how you can facilitate the best business relationships possible to ensure harmony.