Starting a business of any kind isn’t easy. The process can be overwhelming and frustrating, and it might not generate the amount of income you’re hoping for. While becoming a landlord can increase your cash flow month-to-month, there’s a lot of planning that needs to take place before you’re able to operate a successful business.
So, if you’re considering becoming a landlord, keep reading our comprehensive guide on how to start a rental property business. We’ve broken down the process into six simple steps to help you jumpstart your journey as a landlord and entrepreneur.
Choose Your Niche
There are two main types of rental properties that you can put your time and money into: long-term properties and short-term properties.
Long-term property rentals include single-family homes, apartment buildings, townhomes, condominiums, office buildings, malls, and more. With these types of rentals, tenants will usually stay six months or more at the property.
In contrast, short-term rentals are typically vacation properties that include beach houses, cabins, homes in residential areas, and more. As the name implies, short-term rentals are usually leased for a limited amount of time.
Know the Laws
It’s essential to have a deep understanding of both federal and state laws regarding your property and tenants. The last thing you want to do is break laws that can result in hefty fines and even a lawsuit. This is especially important if running an eviction background check to screen potential tenants. If you’re planning on conducting a background check, make sure that you follow all of the regulations outlined by the government.
Find a Great Rental
There are several rentals to choose from. However, some will cost you more than others. For example, while running a rental business for vacation homes can be a lucrative investment, you’ll also have to provide constant maintenance whenever a renter leaves. This could be every day or once a week.
You also want to pick a rental that’s situated in a profitable location and that won’t cost too much to purchase. If you don’t have the funds to buy a home, you can also rent the property you currently own to start.
Charge a Competitive Rent
You’ll need to conduct a lot of research before setting the rent of your property. You don’t want the rent to be too high or too low compared to similar property listings in the area. Instead, you want your property’s rent to closely align with nearby homes, apartments, or condos in the community.
Market Your Rental
As soon as you determine the financial details of your property, you’ll want to start marketing the unit on rental sites. This increases your applicant pool, allowing you to be more selective about the tenants you let into the home. You can also market your rental in newspapers, advertisement websites, and even social media.
Hire a Property Manager
While this step is entirely optional, hiring a property manager can free up your time and keep your tenants happy. Without a property manager, you may have to respond to tenant emergencies at random hours of the night or day. This can make it difficult for you to have a life outside of your rental property business and can get overwhelming if you own more than one property.
The Bottom Line
Starting a rental property business is no easy feat, so if you’re considering becoming a landlord, you should be determined to put in a lot of time and effort. Not planning carefully can cause you to lose money on your investment instead of earning a profit. Use the tips above to get a solid start in the rental industry.