How To Manage Your Money As A Landlord
Being a landlord isn’t as easy as some people may think. As a landlord, you have to manage a lot of things at once, and it can be overwhelming for people who have no experience. This is why many property owners prefer to hire a property manager to do the job.
But if you decide to tackle the challenges as a landlord, you need to learn new things. One of the most important things is learning how to manage your money as a landlord. And that’s exactly what we’re going to learn in this article.
Get a better mortgage
Mortgage interest rates are going to be one of your biggest problems as a landlord. Rates and down payments are going to blow your budget if not managed well. Typically, down payments are rates are higher when buying an investment property, a contrast to buying an owner-occupied home.
This is why you need to always shop around for a better mortgage. Try to get a better deal on your mortgage and find a better one no matter what. You can even refinance to take advantage of lower rates. Considering how big of a factor mortgage interest rates are, any money you save is going to contribute to huge savings in the future.
Screen your tenants carefully
Renting your properties to tenants carries various risks. And to minimize those risks, you should screen your tenants carefully. Many experienced landlords would agree when I say that troublesome tenants aren’t worth the trouble at all. They can be costly and even dangerous to you and your properties.
You can find a standard list of qualifications to judge each applicant who comes to you. Depending on where you live, there may be laws and regulations related to this, for example, the Fair Housing Laws.
Some important factors to check are prior rental history, criminal background, income verification, and creditworthiness. It is also great to ask for previous landlord references to get a better insight into the applicant’s prior rental history. Don’t be scared to take a long time to screen one applicant. The time you spend on the initial screening could save you a lot of money and trouble in the future.
Be kind to your tenants
Being a landlord gives you certain power over your tenants. Have you ever heard stories about hellish landlords before? These stories never end well, and most of these landlords are only after profit, only to lose a lot of money in the end.
Think about it this way, no landlords want to deal with difficult tenants. The same thing can be said for tenants – they don’t want to deal with difficult landlords. Try your best to treat your tenants well and make them feel comfortable, like in their own home. Welcome them the best you can the moment they walk in, and they will return the favor.
The challenges come when you have to deal with property problems. Be patient and, even better, proactive in preventing problems with the property. Respond to every request as soon as possible to help secure lease renewals and avoid expensive vacancies.
Comply with the laws and regulations
One more thing you need to do to manage your money as a landlord is by following all the applicable laws and regulations. Complying with the laws is like investing in your business for the long term. Reputation, security, and a steady flow of income are things you can get by simply complying with the laws and regulations.
This might not be as easy you think, however, considering even an experienced landlord could face an unexpected lawsuit as a result of accidentally breaking the law. It happens sometimes, and this is why it’s important to learn from other landlords. You should study all applicable state, federal, and local laws and regulations regarding rentals.
Being a landlord can be easy, difficult, or tricky. Everything is depending on how you decide to operate as a landlord. And everything you do is going to affect your money. Managing your money as a landlord can be made easier if you follow these tips. Keep learning and I am sure you can be a better landlord.