Deciding whether or not to be a landlord is no easy decision. With a good amount of real estate knowledge, dedication, and preparation, it can be lucrative and rewarding. Without these things, however, this undertaking can easily go south. If you’ve been wondering, “Is now a good time to become a landlord?”, we can help you explore this. Read on for some major considerations as to whether this field is good for you and if now is the time to pull the trigger.
Do You Have a Financial Cushion?
To purchase a rental property, you need to have capital. However, if all you have is what you paid for the property, you could be in trouble. As with everything in life, becoming a landlord comes with its share of curveballs. There will be unexpected maintenance issues that can easily cost thousands of dollars. On top of that, despite the most rigorous of tenant screening procedures, you could end up with a squatter. This is a person who refuses to leave or pay rent, and it’s surprisingly hard to get them off your property. Not only that, but you will have to keep paying the mortgage the whole time you’re going through the legal process to have the squatter(s) removed. As long as you have a financial cushion to handle these “surprises”, you should be fine—consider securing a SBA loan to ensure you’ve got the financing you need, no matter what life throws your way.
Is Your Property Ready for Tenants?
Just because you bought a property doesn’t mean it’s ready for tenants. Zillow lists the following 12 items as things you need to get done before having renters: Rekey the locks, professionally clean the carpets, spruce up the yard, change air filters, get the interior professionally cleaned, replace broken lights, ensure ceiling fans have been inspected, remove all cob/spider webs, clean glass windows and doors, repair screens, spray for pests, and paint/repair/fix anything that needs it. Whew! It sounds like a lot, but these are necessities for a long and fruitful tenant/landlord relationship. If you’re not up to doing this to your rental property just yet, perhaps it’s not a good time for you to become a landlord.
Do You Have the Time to Properly Vet Your Tenants?
The most important part about becoming a landlord is thoroughly screening your prospective tenants, as the last thing you want is to end up with deadbeats who can’t pay the rent or that trash your place. You need to have them fill out a thorough application, talk to past landlords, verify employment, collect references, and run background and credit checks. If a misdemeanor or two comes up in your prospect’s past, it’s really up to you to ascertain whether that’s a risk or not. To ensure you place the right candidate, you should enlist tenant verification services from SmartMove. If you have the time and the inclination to run through this whole process, you could very well be ready to be a landlord. If not, however, you might want to wait until this is something you can commit to.
Are You Ready to Handle the Maintenance?
As we mentioned above, “you know what” happens in life and your rental unfortunately won’t be immune to life’s curveballs. There will be inevitable maintenance issues. Are you a DIYer who actually enjoys handling these fixes yourself? If so, becoming a landlord right now might be just what you need to be doing. If not, however, you need to be ready to hand the baton to a reliable maintenance person. And if you don’t live in the area, you need to assign someone who is near the rental property to either do the fixes or outsource them. If the idea of this is overwhelming to you, perhaps this isn’t the line of work for you right now.
Is it a good time to become a landlord? If what we’ve mentioned sounds not only manageable to you but you’re more than up to the challenge, then we say go for it. If these items seem beyond what your life will allow at the moment, then perhaps you need to wait until a later date to think about becoming a landlord.