If you’re thinking about renting the property you already have or buying a property to invest your money in it and become a landlord to receive passive income, there’re a lot of things you need to consider before finalizing the decision and taking some steps towards the goal.

As some people consider buying a house or an apartment through mortgage and letting the tenants to live in it as a great way to obtain real estate, others become landlords when they don’t want to sell the family house they received as a bequest or a smaller house their family overgrew and moved out from.

With the current housing market conditions and the fact that less and less first-time buyers are willing to purchase accommodation in particular, you may think that joining the booming rental market will be quite beneficial for you.

Nevertheless, being a landlord is anything but an easy way to earn money.  It’s rather important to assess the responsibilities, the legal preparation, the risks and the amount of work landlords have to deal with to understand whether the job is right for you and if you’re able to cope with the difficulties related to maintaining a rental property and keeping it occupied in order to receive a steady income. Thus, here’re a few things you need to consider before going any further in perceiving the goal of turning into a landlord.

Thigs tocinsider before becoming a landlord

Mortgage and rental property service expenses

Those who’ve already bought their accommodation on an owner-occupied mortgage are legally prohibited from letting the landlords in and earning money by gathering the rent. Thus, if you don’t want to break the law and deal with both legal and financial responsibility, you’ll have to go to your bank to negotiate your mortgage agreement and switch up some of its provisions to obtain buy-to-let mortgage, which allows renting the accommodation to someone else.

In addition to that, getting the paperwork done, preparing your house for prospective tenants and actually finding the first ones for your property will take some time (at least 1-3 months). Thus, you need to get ready to pay back the monthly mortgage payment on your own until you get the tenants, as well as save some money to cover additional costs. Otherwise, you may end up trapped in an unfortunate financial catastrophe.

Moreover, you need to include the expenses caused by the preparation and maintenance measures, such as acquiring the landlord’s insurance, keeping your house/apartment in appropriate condition, signing up with the rental property agency, hiring a rental property manager, accountant and lawyer to conduct the paperwork related to turning your residential property into the rental one, go through the necessary legal procedures, draft the tenancy agreement that meets the local requirements, find the tenants and keep track of your revenue for further tax preparation.

Therefore, the cost of monthly rent of the accommodation, similar to yours, you see on Craigslist and other websites is definitely not what you’re going to earn as a landlord.

Legal training

Landlords have to be legally literate, as they need to follow the provisions of both federal and state law from determining whether their property is eligible to become a rental one, figuring out the rights and obligations of landlords and tenants, paying profit taxes to ensuring that they don’t violate anti-discrimination laws when interviewing the prospective tenants or housing laws when allowing a excessive number of people to live in their tight quarters.

For instance, apart from being non-discriminative to the prospective tenants, you need to make sure that your rental property has to meet the requirements of house safety and health codes, as well as adhere to the provisions regulating the way landlords should handle security deposits or tenant evictions in case of their failure to pay the rent.

Thus, you need to finish your rental property law home study or pair with a real estate lawyer to make sure that you follow the legal provisions and fulfill your obligations as a landlord.

You need to get the house tenant-ready

It’s the next article of expenses to need to be able to get covered before you receive any rental profits. Surely, you may attempt finding the tenants who don’t mind renting an unfurnished home that lacks basic appliances. But the chances that you’ll waste a lot of money while your property remains empty are a lot higher.

Thus, it’s better to invest some money in your property and hire a general contractor from HireRush.com to conduct a number of renovations (get hardwood floors refinished, carpets – replaced, walls – repainted, main kitchen and laundry room appliances – installed) and get basic furniture for the rooms to increase the value of your apartment/house and find the tenants faster.

Being landlord is a job with many roles

Landlords aren’t just the people who hand the keys to the tenants and come once a month to collect the rent and check on the tenants and the property. There’re so many things they have to learn to do on their own if they don’t want to pay a significant amount of their rent income to the according rental property services.

 In fact, a landlord needs to adapt to various situations and be able to act as:

1. a relator and negotiator (when he’s looking for a tenant and attempting to sign a tenancy agreement),
2. a detective (to conduct a background check on the prospective tenants and determine the level of their responsibility, financial independence and reliability),
3. a handyman (to conduct some minor repairs tenants aren’t supposed to handle),
4. a debt collector (when tenants fail to pay their rent on time),
5. a supervisor (constant property monitoring to make sure that the tenants maintain it in a proper condition).

You need to get ready to those roles to protect your rights and property, be successful as a landlord, receive stable profit and develop friendly relationships with the tenants.