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If you’re in the market to buy an investment property, now is an excellent time. The uncertainty caused by the novel coronavirus has prompted many who were on the fence about selling to choose a side. You can score significant bargains.
However, becoming a landlord doesn’t mean your job ends when you find a suitable property and tenants. It’s a full-time career for many because of the workload involved. Nevertheless, it’s a reliable way to pad your income while providing much-needed housing. Here are five skills for landlords to that are essential to succeed.
1. Financial Savvy
Do you know how banks finance rental property differently than primary residences? If you aren’t prepared to pay in cash, you will need to do your homework to locate the most favorable mortgage. Depending on your credit score, you may need to consider options such as hard-money lenders — how certain are you of this gamble?
Furthermore, you’ll need to learn how to research a prospective tenant’s credit history. Additionally, you’ll need to take a moral stance — are you willing to overlook less-than-perfect scores if the renter has a reasonable explanation? Seldom will you find individuals without a blemish.
Finally, you’ll need to know how to manage your books. Becoming a landlord means running a business. That means you are responsible for paying quarterly taxes and tracking your profits and losses.
2. Market Knowledge
How well do you know the neighborhoods where you plan to invest? You need to rely on more than Zillow if you start small. The locals will know if there’s a problem with property foundations long before the media catches wind. If you only intend to manage one or two units, get the inside skinny by talking to neighbors before investing.
To develop this talent from our list of skills for landlords, you also need to pay attention to nationwide trends. Some forecasters predict more people will move out of the big cities because of the increase in telework. While this migration may mean you score a brownstone for a song, can you attract tenants who can afford the payment?
3. Repair and Maintenance Skills
The sweet tenant in Unit 2 always pays in advance, but she’s hopeless about minor repairs. Do you want to have to call in a professional whenever garbage disposals won’t spin, or a hinge gets squeaky?
Your tenants don’t have an ownership interest in the property — you do. Therefore, if you don’t correct issues, they’ll learn to live with them or move. Either way, you’ll need to fix the problem someday. If you want to keep things smooth and retain quality tenants, you’ll do the right thing by hopping on it sooner. Knowing how to swing a hammer can save you considerable green.
4. Organizational Skills
Who paid their rent on time? Who is within the 5-day grace period? On which tenants do you need to call a collection agency?
As a landlord, you need to keep organized if you hope to meet your tax filing obligations. Failure to do so can result in tax liens, which can hinder your ability to purchase future units and expand your business.
Additionally, you won’t remain a viable entity for long if you don’t collect rent when due. Make it less cumbersome for you and your tenants by automating this process. Allow them to pay their bills online, and if possible, set up your accounting software to automatically add these payments and alert you to missed ones.
Empathy gets a bad rap in America. The ideals of bootstrapping and rugged independence clash with the reality that we live in an interrelated society. The actions of a few — such as officials shuttering businesses — have a direct impact on others and their livelihoods.
Remember the advice to determine how comfortable you are with taking a moral stance? Times like these demand it. While some states still have eviction moratoriums, if yours does not, can you live with removing a non-paying tenant during a pandemic if their lack of income stems from the shutdown?
What about those who owe several months of back rent? You might have a mortgage to pay — how flexible can you be with your tenants? Communication can get heated in emotional times like these — you are, after all, dealing with someone’s home. Do you have the requisite empathy to handle such conversations with tact and respect?
Become a Savvy Landlord by Developing These 5 Skills for Landlords
It takes much more than sufficient credit and cash to become a landlord. Before you make the career shift, ensure you possess the five skills for landlords above.