As a young investor or as a rookie in the investing world you’re going to be wondering about a few things when it comes to real estate…
How do you become a landlord?
What does it take to get started with this source of passive income?
What does it take to be a landlord?
The Landlord Starter’s Kit is going to cover every aspect of becoming a landlord. Now we’re about to dive into how you can become a landlord.
Buy a property.
The first thing you need to obviously do is to buy an actual property to rent out. You have many options here when it comes to looking for a property to purchase. You can buy a brand new condo, find an old home, or get some sort of a multi-unit property.
When you finally find the ideal property to buy, depending on your income, credit score, and mortgage pre-approval amount, you can begin the process of actually buying the property. From the time that you make your offer until you finally get the keys in your hand will take at least a month or so. During this time all you can really do is chill. You can slowly start looking for tenants if you’re confident that you’ll have the property ready by the advertised date.
Since I bought a brand new condo project, they still hadn’t even put a shovel in the ground. It was over two years until I got the keys for the place.
Fix the place up if needed.
I personally bought a brand new condo so that I wouldn’t have to deal with any repairs or any of that fun stuff. If you’re pretty decent at handy work around the house and want a do-it-yourself project as a side hobby, then you can fix the place up to improve it or customize it.
One of my friends recently purchased an old building that was in poor shape. He actually enjoys the whole process of fixing a place up. He’s been going through every unit and customizing it. I took the lazy way out and got a place that was going to be ready to go. This saved me time and money. I lost out on experience.
Look for tenants.
Now you need to find someone to pay your mortgage for you. This is where you begin looking for tenants. I actually found my tenant in one day so I can’t even pretend to tell you that it was a long and tedious process for me.
The best way to look for tenants is to use the Internet. It has become ridiculously easy to find people looking for a place to live. I recommend putting up an ad on Kijji and then waiting for a response. If you don’t hear anything then you can always try out some of the other sites.
Screen all tenants.
If your ad is even half decent, you’re going to plenty of tenants calling you and emailing you to see the place. Your job now is organize all serious applicants and arrange one day (if possible) where you have the various candidates come by to see the place.
You have to screen all potential tenants that want the place. You don’t want to leave the keys for your greatest asset with some random person.
The best tips for screening tenants for your rental property are:
- Do a criminal check.
- Check their employment and the stability of their work.
- Get a few references. The only caveat here is that all references are good references. Nobody is going to give you the number to their enemy.
- Call their previous landlord.
Once you’re done with the screening process you can move on to the next part.
Choose a tenant.
You need to eventually find someone to be the tenant for your property. How you choose a tenant will vary. Picking a tenant should depend on:
- The vibe you get off them.
- Their income stability.
- Maturity level.
Once you decide on the tenant you can officially call yourself a landlord.
Stay on top of the rental property.
Hopefully you screened all applicants because it’s going to determine the amount of work and crap you have to deal with once the tenant moves on. At this point you need to stay on top of all calls, bills, and rent payments. You need to ensure that you change the hydro to the tenant’s name and that every single bill is covered so that your credit score doesn’t tank. The calls that you get depend on the issues the tenant has. You should plan for the worst and hope for the best.
That’s exactly how you become a landlord. There’s much more that you need to learn on this process. This is just the preliminary information to help you get started.
For more from the Landlord’s Starters Kit you need to check out the other articles in the series:
Do You Want to be a Landlord? Let’s Look at Every Cost Involved.
