Home Guides Renting Renting Guide for Landlords

Renting Guide for Landlords

Being a Landlord

Contrary to popular belief, being a landlord is no longer considered a luxury where one purchases a property and waits for the rental income to pile up. This may have been possible in the past, but times and the industry has certainly evolved since.

Many property owners can now testify that compared to “flipping” property in the short run, purchasing property for long-term rental income is in fact equivalent to a full-tile job that requires long-term commitment with substantial demands on the landlord’s time and effort.

Of course, being a landlord can be – and should be – a wonderful and profitable experience. Becoming a landlord may well be one of the main reasons why properties are still considered the best form of investments. To be such a landlord, there are several considerations to be given serious thought before one embarks on this journey. Examine your capabilities and desires, and make sure that it is truly the road you wish you take. Everything else will fall into place.

Are you cut out to be a landlord?

Number-crunching is the most valuable skill to have when selecting, buying and selling real estate. However, when it comes to being a landlord, other than looking at the transaction in a purely quantitative perspective, your soft skills, or to be more specific, your people skills may prove to be the more valuable skills.

If you intend to be one of those landlords who benefits from your investment, ask yourself these questions:

• Are you willing to work with people?

• Do you have the patience and discipline to stick to a long-term plan?

• Are you a good communicator?

• Can you diffuse potentially volatile situations?

• Can you deal with uncertainty?

• Are you decisive?

Make no mistake – as a landlord, there will be occasions when you will find yourself needing to handle some issues such as dealing with a tenant, or make a decision on a repair or an upgrade. Your response in a professional and friendly manner to these issues will ensure that the profit potential of your investment remains maximised, and this is crucial to keep you in the game for the long term.

Most people do not really think of real estate investors as being in the service business, but in reality you are. Your tenants are your clients. They are your source of income and the key to keeping your investments profitable. With the correct people skills, you will be more adept to manage your tenants correctly.

Your time as a landlord will be mostly uneventful (in a good way). Perhaps the only thing you have to do for a given property is to go online every month and make sure that the rental is deposited into your bank account. Dealing with your tenants will be relatively pain-free if you stick to a few principles:

• Invest in the right market segment (for you)

Do you like dealing with higher-end clients? Will you get annoyed by the rich college/university students moving into your townhouse? Would you be more comfortable dealing with working class tenants? There are all sorts of communities out there to invest in, so think about what type of people you are comfortable dealing with and invest accordingly to avoid frustration and mismanagement down the road.

• Create a relationship based on mutual respect and courtesy

Return phone calls from your tenants promptly. Be responsible with repairs. Show concern for your tenants and they will respect your time and your property.

• Communicate clearly, openly and early

Surprises lead to misunderstandings and misunderstanding lead to conflict. You control a very important element in the lives of your tenants – in most instances it is their home. Communicate early if you have plans to work on the property, to increase the rent, or to make any other changes that are important elements in their lives.

Don’t let your investment manage you – avoid landlord burnout

To maintain your life's balance, it is important to plan your investment management activities to maintain profitability of your rental properties, and not let your investments manage you.

Most owners have positive experiences as investors, but not all of them. You cannot decide to have multiple properties based on your positive experiences, and assume that all your experiences will be equally positive. Almost a third of property owners report that they would not buy property again. Real estate, as it turns out, may not be for everyone.

There are a number of right ways to be a landlord and a lot of wrong ways to be one too. Choose a wrong path and your investments will rule your life. Choose the right path and you’ll be able to manage your investments and use real estate to help build you a secure and solid financial future. Generating security through real estate is all about using leverage to build a portfolio over time. You won’t have the endurance to accomplish this if your landlord duties are driving you up the wall. Know what you are getting into.

A number of real estate courses on the market are motivational seminars with a thin coating of real estate education. These seminars and courses may be useful if they cause you to take charge of your financial destiny, but don’t go charging into your first deal without the right tools, goals and most important the right mindset and attitude.

The worst mistake you can commit as a landlord and as an investor is to underestimate the amount of work that it takes to remodel and manage a property. As a result, investors tend to bite off more than they can chew.

When a good opportunity comes by, your first instinct would be to seize it. But, even under a deadline, there is still time to run a basic financial evaluation. Do you expect the property’s revenue to cover expenses? Have you made allocations for future repairs? What rate of return do you expect for the property? Having a realistic view of the economics is a crucial first step before you start investing. Remember that you hold the power as an investor. Do not let yourself to be rushed into any deals without a thorough understanding of what you are getting into. The best way to keep your peace of mind is to make investments that offer an adequate return, so looking before you leap is probably the most important element in keeping your stride as an investor.

Source: http://www.iproperty.com.my/news/686/Being-a-Landlord