Investing in real estate is one of the best ways to accumulate wealth. In fact, there is plenty of research showing that homeowners, on average, have more wealth than those that do not own real estate. Furthermore, real estate offers another way to diversify your investments. Of course as with any investment, there are risks associated with becoming a landlord. Below we discuss some things to consider.
Tips for being a landlord
- Determine your budget and goals: Investing in rental properties requires some savings to not only purchase the property, but to also make any necessary upgrades. Furthermore, it is important to research the market and determine any areas that you would like to focus on.
- School zones matter: Depending on the area that you are focusing on, it is likely that a good school zone will be an important factor for potential tenants. In fact, schools are oftentimes the most important drivers for some rental properties.
- It is a business & should be run like one: In addition to regular bookkeeping, as a landlord you should account for adequate reserves while also keeping track of all business related expenses. Keeping a thorough record or all business related receipts will be critical when it is time to file for taxes.
- Thorough background screenings are a must: When it comes time to review tenant applications, it is critical that no corners are cut. It is highly recommended that you utilize a reputable tenant screening service that will analyze credit, criminal and eviction histories. Just remember, it is better to have a vacancy than a problem tenant that is not paying rent and/or destroying your property.
- Read and familiarize yourself with the landlord-tenant statute: This statute is written to be understandable for people that are not attorneys. Having a thorough understanding of this statute will better prepare you to be a successful landlord.
- Develop a thorough lease agreement: Ideally, it is recommended that you hire a real estate attorney to assist you with developing a thorough and fair lease agreement. This same document should be applicable to future rental properties that you may add as well.
Although this article is not intended to be an all-compassing guide for landlords, it provides a few tips to get started. For many, the thought of investing in rental properties is intimidating. With this said, it can be a great way to supplement your income while also building up your savings for retirement. It is important to remember that during typical real estate markets, properties appreciate over time. When you have an investment property that is rented, it is likely that you will realize an income while the rental amount is also covering the property’s expenses. All the meanwhile, this property should be appreciating in value. After several years, it is possible that the property will not only have gained in value, but it’s associated expenses were covered by the rent. This is how you can accumulate savings for retirement at an even faster pace!
At Live South Florida Realty, Inc. we have assisted many clients build their real estate investment portfolios. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!