Practical Tips for Newbie Landlords

The National Association of Residential Property Managers has seen membership grow by 20 percent in the past year. Here are tips for those just getting started.
By: Jeff D. Opdyke: REALTOR® Magazine Online
With the subprime lending crisis making it harder to get a mortgage, rental demand is increasing.

That has spurred many people to explore the financial benefits of being a landlord. Membership in the National Association of Residential Property Managers in Virginia Beach, Va., has increased by more than 20 percent in the past year.

Some new landlords have entered the business because they couldn't sell their homes and needed to find a tenant, while others are deliberately acquiring properties at below previous market prices.

Here are some important tips for newbie landlords:

    • Don’t overpay for a property or expect to get back everything you’ve invested.
      A house will attract only so much rent. If you overpay, you can raise the rent
      only so much before your property starts sitting vacant.

    • Hiring a property manager who can help you navigate local ordinances, price
      properly and find reliable tenants is often worth the 10 to 15 percent of the
      rent they charge.

    • Run a credit check on potential renters and insist on references from previous
      tenants.

    • Don’t under-budget for repairs. Keeping the property in good condition helps
      attract quality tenants.

    • Skimping on insurance can put a landlord in an expensive pickle.

    • Aim for an annual return of 10 percent to 12 percent. Finding a good
      accountant who understands the dizzying array of tax breaks, deductions and
      write-offs is often critical to achieving this margin.