5 Questions to Ask Yourself Before Becoming a Landlord

  • David Passman
  • 02/11/19
 

Being a Landlord Brings Responsibility—Here’s Why.

Becoming a single-family property landlord is one thing, but being a landlord for a multi-family building is another. There are different and bigger challenges that come with a multi-family property. With those challenges, though, can come bigger profits. Financially, investing in a multi-family property is often worth it, but there are five questions you need to ask yourself before taking on the responsibility.

How’s Your Cash Flow?

The first question you need to ask yourself is whether you will have a positive cash flow. Your tenants must pay their rent and pay it on time. This is the most important part of being a landlord. You must make it clear that tenants will be evicted if they don’t pay their rent. Know the eviction regulations and be sure to follow them. You will also need to charge a late fee for any rent received after the grace period. Rent checks are the key to successful rental properties.

Can You Effectively Screen Applicants?

To improve cash flow, you must learn to screen your rental applicants. Taking applications for apartments with key credit information will provide you with the ability to run a credit and criminal background check. Additionally, you should ask for references from past landlords along with at least two recent pay stubs to verify income. If you set up an effective process at the beginning, it will help you rent to only the best renters and reduce your risk of having to evict tenants. There are also new technologies and apps that help landlords effectively screen tenants. 

How Will You Handle Pets?

Pets can complicate renting. Pets could be a nuisance to other renters and could leave behind smells and stains in the apartment after they vacate. On the other hand, with nearly 70 percent of households owning pets, you will attract more renters if you allow them. Mitigate your risk by requiring a pet deposit and monthly pet rent. Making the building more pet-friendly will also make it convenient for pet owners to follow the rules.

Have You Done a Market Analysis? 

Research the rental property market to understand average rents, comparative properties, values, and occupancy rates to determine your optimum offer and return on investment. An experienced real estate agent can help you at this stage of the game. 

Do You Understand Renter Rights and Landlord-Tenant Laws? 

Tenant rights are in play from when potential tenants start looking for a property until their security deposit is returned. Understanding both tenant rights and your rights as a landlord is important when showing a property, taking applications, signing the rental agreement, ending the tenant-landlord relationship, and returning--or not returning--the security deposit. Understanding tenant rights will benefit you as a landlord and is a key consideration to make before taking the leap into multi-family investment. 

Knowing the right questions to consider will help you make an informed decision regarding whether or not to purchase a multi-family property. Being a landlord to many tenants instead of only one makes it a complicated but often rewarding business. Being well-informed and having good processes in place will go a long way. 

 
We at The Passman Group are here to help you find that special property and to help you with these important questions. Call us today!
 
 
 

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