What You Need to Know before Becoming a Landlord

Thinking of becoming a landlord? While this can be financially and personally rewarding, you must do your homework before you take the leap.

To help you learn the ropes and avoid any costly missteps, here are some handy tips of the trade.

It cannot be overstated how important it is for landlords to do their pre-closing homework.

During the home inspection, remember to take a thorough look at the property to see what will need to be repaired or replaced.

For example, you might want to change the toilets to low-flow models. You’ll also probably want to invest in essential upgrades to three common areas: water, door locks, and flooring.

Don’t make the rookie mistake of underestimating the costs of fixing and maintaining the property, both before and after a tenant has moved in.

Most landlords account for insurance and taxes, but it’s easy to miss expenses like garbage, gardening, and regular maintenance.

According to¬†Money, you should set aside at least 35 to 45% of your annual rental income to cover these costs. (And when you’re calculating this income, it’s a good rule of thumb to account for only 10 or 11 monthly payments per year.)

When it comes to finding a tenant, don’t be too relaxed. Interview prospective tenants on the phone first to find out if they meet your requirements. Then, it’s important to check your potential tenants’ credit and speak to their references. Confirm the source and amount of their income. It should be at least 2.5 times the annual rent. You should also learn what’s legal in your town. For example, can you ban pets?

Once you’ve found a great tenant, act fast to get the lease signed. From there, never forget that you’re running a business and your tenant is a customer. Treat your customer right, and success is more likely to come your way.

Prepping Your Home for Sale: Get the Most Bang for Your Buck

Every seller wants to maximize his or her profit. Partnering with a real estate agent is a great start. Homeowners can further increase their bottom line with a few simple steps. To get the most out of your house, complete the following before you list.

Hire your own home inspector. If a buyer’s inspector finds issues with your home, you can expect your profit to shrink. Stay one step ahead by hiring your own home inspector to unearth any potential issues.

Invest in repairs. In addition to addressing any trouble the home inspection reveals, it’s a good idea to have cosmetic issues addressed. Prospective buyers notice things like cracked tile, chipped baseboards, or a squeaky floorboard, and this will be reflected in their offer.

Upgrade where it counts. You don’t have to renovate your whole house to turn a healthier profit. Make small, impactful swaps, such as switching out lighting, cabinet hardware, or shower heads for cleaner, more contemporary options.

Add a few new accessories. Fresh flowers and potted plants go a long way in making a room feel inviting. For a cozier living room, drape a cable-knit blanket over the couch. String Edison bulb lights over a patio and put an Adirondack chair on the front porch. These small touches add major warmth.

Treat it like a model home. To sell your house quickly and for the most money, treat it like a house you’ve been hired to stage. Put personal effects into storage, declutter, remove artwork that could be seen as too loud, and make sure the house is absolutely spotless.