Ever wonder what it’s like being a landlord?
Well, from the eyes of a 20-something-year-old college student managing properties from many states away, let me try to give you a glimpse and a couple of tips to consider when starting. First, let me start by sharing what being a landlord is NOT. Being a landlord is not easy, it’s not fun, and it’s not going to get you rich in a short amount of time. It’s not always glamorous or sophisticated. It’s not an easy thing to accomplish (35% of rental businesses fail in the first five years). I will admit: becoming a rental property owner is extremely difficult to begin, challenging once you’ve got there, and a nightmare at its worst moments. BUT, it can be a very fulfilling and rewarding experience if done the right way.
Let’s look at the good news. The IRS reports that 10.6 million(around 3%) Americans reported rental income from 17.7 million properties. On the flip side, almost 43 million people rent their living space. So, the rental housing demand is not going anywhere anytime soon. And although it is a huge financial and life decision, becoming a landlord doesn’t have to be expensive. About 40% of landlords in the US own property worth less than $200,000 and 70% own less than $400,000 worth of rental properties. There are many ways to break into the rental market and deals waiting to be found for those willing to look (and more importantly wait) for the right deal.
Making the leap into the rental business industry can be daunting. That is why it’s important to surround yourself with people experienced in the things you know nothing about. No landlord will ever run the whole operation by themself, so write it into the business plan to connect with the necessary specialists and establish a good business relationship. Another great way to get ahead is from learning from others’ mistakes and successes. Blogs, books, and social media can have stories that help you avoid expensive mistakes as you maneuver through landlording.
Here are a few things that will help along the way…
A TEAM
No matter how handy or money-savvy you are, you MUST have a support system in place for those times when tenants lose power at 4 in the morning or a storm blows down a tree in their front yard. Make sure you prepare a LONG list of contacts as your first step to becoming a rental investor. This includes a handyman(or 10), lender, utility companies, contractors, lawyers, tax specialist, possibly a property manager, and of course- a real estate agent. At KW, we try to provide our clients with every contact we have that could help their businesses.
PATIENCE
If I had to pick one piece of advice for beginner investors it would be to have patience. From finding the right deal to managing units, you will need every ounce of patience you can get. It might be months or even years before an investor finds the right deal, negotiates terms that are right for them, and officially becomes a property owner. Not to mention any necessary rehab. Don’t be in a rush to spend your profits because, when starting out, your rent checks are already spent before you get them.
ADAPTABILITY
Any and every investor will tell you that the rental investing journey will go in every direction except the one you plan for. You have to be willing to pivot your strategy and work under pressure. Things WILL go wrong. Your ability to roll with the punches will determine how successful you are in this business.
So, is it worth it? One word: Absolutely! Owning rental properties is a challenging adventure that is extremely fulfilling once you’ve picked yourself out of the dirt a couple of times. I truly believe that, with the right team and systems around you and the patience to handle the ups and downs, anyone can succeed in being a landlord. That’s not to say that it will be pretty or that you won’t “fail” along the way, but investment in a rental property can be a life changing experience.
To explore how you can start your own rental business, reach out to our team to discuss the first steps! You never know when the right deal will jump out in front of you.
- Ryland Holt