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August 1st, 2011 9:20 AM by David W. Welch
With the ongoing economic downturn, climbing onto the property ladder has been a difficult ordeal for many people. Unable to afford to buy property, many would-be first time buyers have decided to rent property instead. This seems to be the only solution. At the end of the day people still need somewhere to live, and so if they cannot afford to buy, then the only answer is to rent.
It may indeed seem like a wonderful time for already existing landlords as they can profit from the difficult state of the economy. Also, with house prices dropping, many landlords will find that this is a perfect time to take advantage of the real estate market, and therefore vastly expand their portfolio. This will then lead to further turnover for many landlords as they will of course be renting out more properties and so their monthly intake will increase.
With the property market underperforming it is also a great time for any first time landlords as they will be able to buy new properties at lower prices than previously. Therefore, if you are thinking of becoming a landlord it could be a great time to capitalise on your idea and invest in property to rent out to tenants.
However, while you will be hopeful, and indeed likely, to make tidy profits by renting out real estate, you must also be properly prepared for any concerns you may have to face. It is likely you will have more prospective tenants than rooms that need filling, therefore, when it comes to choosing your tenants, make sure you check that they will be able to pay their rent. Unpaid rent is the most common concern that landlords face, and chasing rent payments can be a very stressful, time consuming errand. However, provided you have a good relationship with your tenants, and provided you ensure that they can pay every month on time, then this is of course an easily avoidable situation. Perhaps you should run a credit check before making your decision on whom to rent your property out to.
Furthermore, it is likely your property will sustain some damage over the years. If it is accidental, and your tenants own up to it, then you may be able to come to some sort of reasonable agreement about having the damage repaired. However, if it is malicious damage that has been caused then, with a high-quality Landlord Insurance policy, you will be covered against such unfortunate circumstances. A good insurance policy will also cover you against the possibility of theft. These are situations you cannot predict, however they are certainly ones you can be prepared for. So make sure you are insured as a landlord!
In addition, it will be important to hunt around for the best mortgage deal you can find. There are a whole host of great offers out there, so make sure you find the one that suits you best for the here and now, and for the future!
Another piece of advice would be to make sure you set your prices right. If you charge too much rent you will scare away prospective tenants. However, if you set your rent too low then you will be losing out on potential profits. After all, you want to make money from your property in order to recuperate initial costs and pay off that mortgage!
All in all, becoming a landlord can be an extremely exciting, fulfilling venture. Just make sure you do it right!
Re-posted courtesy of Steven Mikellides (Gravytrain)
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone