Becoming a rental property owner is a good way to supplement your income. Starting with just one home, you can generate income almost immediately. As you become familiar with the business, you can purchase additional homes to rent and make your mark in the real estate business.
Learn all you can about the rental property business and make sure you have what it takes to handle its many demands. Speak with other realtors to get a feel for what it entails and supplement their input by researching real estate magazines and industry periodicals.
Determine how long you would like to own your rental property. If you decide to keep a rental property for the long-term (i.e. 20 years or more), plan on investing more in maintenance costs and repairs.
Network and build your list of business contacts, including investors, realtors, property managements firms, etc. Join a local landlord group or property owner association.
Locate homes that are for rent in the area. Speak with the owner directly and inquire about his desire to sell the property. Some owners are renting out homes either because they can't sell it or don't have time to list it for sale. In such instances, they are often happy to unload the rental to a potential buyer.
Sign up to receive foreclosure listings and watch for homes that meet your criteria in the desired area.
Get your finances in order and work to repair your credit. Apply for a loan and get a prequalification letter so that you are prepared to purchase when you find a desirable property.
Hire a professional to inspect the home before you go through with the purchase. Calculate any necessary expenses to repair the home, based on the results of the inspection. Be sure the home will supplement your income and not drain your pockets due to added maintenance expenses.
Research rental rates of homes in the same area. Determine what you will charge for rent, ensuring you can cover the mortgage and insurance and ideally generate at least a 10 percent profit each month.
Purchase the home and immediately begin making any necessary repairs so that there will be no delay in placing the home on the rental market. Clean, paint, fix appliances, etc.
Decide if you will be enlisting the help of a property management company or if you will manage the rental property yourself. If you choose to work with a property management company, have them list your property on their rental website.
If you choose not to use a property management company, place an ad in the real estate section of your local newspaper and with online social media sites listing your home for rent.
Speak with an attorney to cover all legal aspects of being a rental property owner. Have him draw up your lease and explain all necessary rental guidelines to you.
Screen all potential renters. Conduct credit checks, employment verification, background checks, personal reference calls, etc. Eliminate any potentially negative renters because they may cause a problem later on.
Obtain a security deposit to cover any damages to the property that may occur. Collect the first month's rent and security deposit at the lease-signing. Walk the future tenants through the home and have them sign off that there is no pre-existing damage in the home.