Are you thinking about buying your first rental property? Being a landlord can be a challenging experience. There are many things to keep track of, and one mistake can cost you.
In our latest post, we have put together a checklist for the process of buying a rental property, the process of screening your tenants, and a list on how to manage once you are officially a landlord!
Own Your First Rental in Fort Myers: A Checklist
When You’re Ready To Buy
- Have Your Finances In Order –Before you embark on the exciting journey of finding your dream home, take some time to get your finances in order, especially your credit score. Having a good credit score is crucial for securing a favorable loan with a competitive interest rate. A lower interest rate translates to significant savings over the life of your loan, putting more money back in your pocket. Knowing your credit score beforehand allows you to address any potential issues that might hinder your loan application. This could involve catching up on any late payments, negotiating settlements for outstanding debts, or disputing any errors on your credit report. By taking these proactive steps, you’ll be in a much stronger position to secure the financing you need to turn your dream home into a reality.
- Set Your Limits – Deciding how much you can truly afford to spend on a house is crucial. Don’t get caught up in the excitement and stretch your budget thin. While that dream house might seem perfect, if the mortgage payment puts a strain on your finances, the stress will quickly overshadow the joy of homeownership. Consider all your expenses, not just the base mortgage payment. Factor in property taxes, insurance, and potential maintenance costs. Be honest with yourself about your financial situation and prioritize affordability over reaching for something just out of grasp. Remember, a comfortable home payment allows you to breathe easier and enjoy your home as a place of relaxation and security, not a source of constant worry. It might mean compromising on some features or square footage, but that sacrifice is far outweighed by the long-term peace of mind that comes from staying within your means.
- Research – Talk to investors, read as much as much as you can, study your market’s trends, and consider buying a course. The best investors never stop learning.
- Take Notes – Take detailed noted of each property you see. Many people will use a chart to easily compare bedrooms, bathrooms, price and other variable features of a home.
- Hire Professionals to Help – A first-time investor should never navigate the process alone. Enlist the help of professionals to help you along the way.
- Buy Below Market Value – To help guarantee a return on the property, you should try to only purchase properties that are listed under market value. If you aren’t able to get the lease payments you are after, at least you will be able to sell the home for more than what you bought it for.
- Calculate a Property’s ROI – To calculate ROI, the net profit of your investment is divided by the amount of money you have invested. The results are expressed as a percentage or ratio.
When You Are Screening Tenants:
- Advertise – Utilize the most popular sites, and make sure you have excellent photography and accurate property descriptions.
- Provide Application Forms – Hopefully, you will get tenants who want to apply on the spot. Make it easy on them by having application forms readily available.
- Background Check – Running a background check on prospective tenants is crucial. There are many services that can assist with this.
- Credit Check – In addition, running a credit check will help make sure your tenant will be able to pay you!
- References – Thoroughly check all references provided.
- Sign an Agreement – The agreement, or lease, should be very detailed and leave no room for disagreements. Include your process for conflict resolution.
- Conduct an Inspection – Both you and the tenant should inspect the property (together if possible.)
- Clean & Repair the Property – Any repairs noticed during the inspection should be made before the tenant moves into the home.
- Change Locks – To reduce your liability and keep everyone secure, you should change the locks with each new tenant.
- Final Steps – Collect deposits, rent, and provide keys.
After Your Tenants Have Moved In:
- Tenant File – Create a tenant file with all the pertinent information. Keep track of all tenant issues.
- Calendar – Keep track of important dates, lease terms, maintenance schedule. If you own many properties, property management software will help to keep you organized.
- Stay on Top of Things – Keep the house in good shape and exercise a proper maintenance schedule.
- Master Vendor List – You will inevitably have to pay repair costs and maintenance fees. Work with vendors you trust for maintenance, plumbing, AC repair, etc. Keep their contact info readily available.