Forget about flipping houses this year. With more families opting to pay for a lease rather than a mortgage, the decision to rent out properties is now the most popular real estate investing decision you can make. But before you go and buy all those foreclosures in your neighborhood, there are a few things you need to know in order to be a successful landlord.
1) You’ll need to evict someone. If you’re not the type of person to step on anyone’s toes, then being a landlord definitely isn’t for you. At some point you’ll need to evict a tenant, and chances are that it’ll be someone you actually like. Be prepared to play the bad guy. If you can’t put on the black hat from time to time, well, there’s a price for that.
2) It’s not a regular job. Landlords don’t work on a 9-5 schedule. There will be days when you have nothing to do and days when you’ll be up until two in the morning fixing a leaky pipe. In order to be successful, you’ve got to be comfortable wearing different hats – repairman, realtor, etc. – while maintaining flexible hours. On the bright side, you’ll get to sleep in a lot more often than you do when you’ve got a morning commute.
3) You need a massive safety net. Owning rental properties means dealing with repair bills, and sometimes those bills can be quite expensive. Something is always falling apart or being broken by the tenants, so it’s important to keep enough money in your checking account to fix whatever damage comes your way. The more properties you have, the larger the financial safety net you need to maintain. If you can’t replace a broken appliance or a section of drywall within a week, you’ll have to deal with some very unhappy tenants, which can be bad news for you if they’re the “online review-writing” type.
4) It can be incredibly rewarding. Despite the way these tips might make it sound, being a landlord isn’t just for masochists. Renting out properties can be an incredibly profitable and comfortable career. Sure, it takes a lot of work up front if you want to be successful, but what good career doesn’t? Once you acquire enough foreclosures through real estate investing, you can hire a team of maintenance engineers and real estate agents to do all the hard work while you sit back and enjoy the steady stream of revenue.
If you’re handy with a wrench and enjoy working around people, maybe flipping houses isn’t your ideal real estate investing pursuit. Instead, consider buying a property and turning it into a rental. It takes some time to learn to effectively juggle the requisite tasks, and you’ll have to wear several hats, but the money you’ll earn every month makes it all worthwhile.
