Are you looking for a way to bring in extra cash? If your full-time job isn’t paying the bills, and if at this point in your life you feel like you’re treading water with no end in sight, consider becoming a landlord. Investing in property could be the right move for you, and it’s a great way to bring in passive income.
Managing a property can also be a relatively smooth process, provided you enlist the help of a trustworthy real estate agency.
Read on for Seeff’s answers to the frequently asked questions for first landlords.
You don’t need a rental agent - a.k.a. Property Practitioner - to manage your property, but Seeff recommends hiring one to make the property management process easier.
While many landlords manage their properties themselves, a Property Practitioner can offer valuable insight, has plenty of industry experience and knowledge, and is familiar with tenants.
A Property Practitioner can take the stress of property management right off your shoulders. After all, you might still have your primary job to focus on or simply not have time and energy to communicate with tenants and sort out maintenance issues.
Ask yourself: am I prepared to treat property management as my full-time job? If the answer is no, we suggest that you hire a Property Practitioner.
Look at the market and the price of properties in your area, and consult your Property Practitioner before deciding on a price to charge for your property rental.
It is easy to get over-excited and demand a high rental rate upfront. But without serious consideration and some research, you could be sabotaging your chances of attracting tenants. Consider the following before you decide on a price:
To choose the right tenants as a first-time landlord, consider their characteristics and financial status. You want a tenant with sufficient income, a stable job, and who can afford the monthly rent and pay it on time. You also want someone who is honest, reliable and communicates well. This person will be living on your property and interacting with your neighbours. You need to be able to trust them.
Be fussy. Demand a high standard (with reason). You should never discriminate against anyone, but you should also be 100% certain you’ve chosen the right person.
In summary, a first-time landlord’s responsibilities are to provide the tenant with a habitable residence and maintain that residence to its initial standard. If a pipe bursts or the roof caves in and it’s not the fault of your tenant (i.e. they didn’t do anything that caused the damage), it’s your responsibility to fix it.
As a first-time landlord, you also need to provide your tenants with a lease, which should be in writing to protect both parties (landlord and tenant). Your lease agreement should be clear on the responsibilities of each party. As a first-time landlord, it’s easy to be in the dark about these responsibilities, so we suggest asking a Property Practitioner for assistance.
The advantage of a long-term rental is lower vacancy rates and consistent income for you, the landlord. The most significant disadvantage is less flexibility; you can’t just stay in the property when you feel like it or let family and friends use it.
The advantage of a short-term rental is the flexibility. You can also take advantage of the holiday season to increase the rates over this period and cater to tourists. However, the disadvantages of short-term rentals include higher property maintenance costs. For example, if you’re constantly renting your property to new tenants, you’ll need to ensure the property is frequently cleaned and prepared for new guests.
Seeff recommends discussing the pros and cons of short vs long-term rentals with your Property Practitioner.
As a first-time landlord considering property investment, consider all the options before you decide. Maybe you don’t want to rent out a city townhouse. Maybe, you have your eye fixed on an industrial building or beautiful piece of land.
There are four main types of real estate: residential, commercial, industrial, and agricultural. There are pros and cons to each one.
The life of a first-time landlord isn’t as easy as it looks, but don’t let that dissuade you. Do your research, interrogate your finances, plan accordingly, and reach out to a Property Practitioner for help navigating the waters of property management and renting.
Read Seeff’s blog on a landlord’s responsibilities for further guidance.