Renting out real estate is a business like any other. To be successful, landlords have to plan for the future and make smart decisions. There is also a bit of luck needed – especially when it comes to selecting tenants. However, with proper preparation, any landlord can rent out properties like a boss.
Calculate the Net
After choosing an attractive property in a good location, a landlord has to do some basic math. At today’s rates, a $300,000 house with 10% down can run about $1,800 per month after taxes and insurance. To break even, the landlord will need $1,800 per month in rent.
Depending on the area, $1,800 could be a piece of cake, or it might be outrageous. If it is the latter, but the home is in a city center or near public transportation, it may be worth it to spend on upgrades to attract a higher-paying clientele. The important thing is that the landlord knows where he or she stands with regard to the monthly nut. That number will form the basis of all future decisions.
It is also crucial to remember that math only exists on paper. The real world is much messier. $1,800 may be the nut, but there could be vacancies or emergencies, and there will always be routine maintenance costs.
Then, there is the possibility of delinquency. However, fortunately, the chances of ending up with a delinquent can be mitigated with proper screening.
Find the Right Tenants
In most cases, long-term tenants are the best ones. When people live somewhere long-term, they take pride in the place. They pay on time, make small repairs on their own, and refrain from severely damaging anything.
To find folks who fit the bill, landlords should screen all applicants for proof of income, credit history, and criminal background. Screening helps to secure good and long-term tenants. Additionally, it helps to insulate landlords from delinquents.
Renting out Properties like a Boss
Even when tenants do pay, renting out properties can be stressful. However, any landlord who gets his or her finances right and finds reliable tenants has a chance at generating positive monthly cash flows – in other words, renting out properties like a boss.