There are plenty of careers that require years of planning. Becoming a doctor requires, at a minimum, eight years of school, four years of residency and additional exams if necessary.
You’d be hard-pressed to find the perfect guidebook on becoming a property owner. It’s not exactly a job that many kids dream about when thinking about what they want to do in two decades of time.
Even though it may not seem like the most illustrious career, becoming a property owner is a fantastic step for many out there. The road can be long and difficult. Turning it into a full-time gig can take much longer than other, more traditional job routes.
If you’re thinking about moving in that direction for your career, what should you be doing and thinking about?
You Need to Be 100% Sure
Some jobs give you the benefit of “trying it out”. If you have a marketing degree, you might look at various firms or ways of marketing. You can scope the market and decide which direction you would like to head and what exactly you might like to do.
With property ownership, you don’t have that luxury. Sure, you can talk to others in the business but nothing is like first-hand experience.
That’s why you need to be 100% sure this is something you can hop in and out of. The process takes too long and too much money for you to be bouncing in and out of it. Make the decision early and commit to it.
Jack of All Trades
When you’re a property owner, you’re going to be assuming plenty of different roles. You may need to be a manager, handyman, and marketer.
Your properties may need to be renovated or just some basic work. It’s much cheaper for you to be doing the work yourself instead of hiring a contractor.
Working with a realtor is great, but you also need to be up to date on codes, laws and the basic code of conduct for purchasing a rental property.
You will also need to step in the role of manager, working with tenants and delegating work to various properties. You might get tired from swapping out all of those hats constantly.
The Money Side
Building up enough cash may be difficult to where you feel like you can make an adequate offer on a place. Unlike home mortgages where you can put down as little as 3%, rental property loans often require as much as 20%.
After that, they’re pretty similar when it comes to length and interest rates. You’ll be able to choose between fixed or variable as well as the number of years.
But just like any other business, turning a profit takes years. Purchasing the property may only be the tip of the iceberg, as you’ll have to put money in for renovations, property taxes and more.
Unfortunately, finding tenants is a bit more difficult than placing a for rent sign in the front yard. You’re going to have to go to great lengths at a time before you feel like you’ve found the ideal tenant.
You could be lucky and be living in a rent-happy city but even then, it might be difficult. You’re going to want to be sure you have someone who is going to be staying for the length you want. You may even have to run a background check on people before they move in.
Know the Rules
After buying, there are plenty of tax laws and other rules about being a landlord. You need to know your rights as a landlord and the rights of the tenant as well.
These can vary state by state and even city by city, so you should be up to date on the latest guidelines.
Also, you should be setting your own rules for the house. Plenty of landlords don’t allow pets or some require rent to be paid at a certain time. Before you even post a for rent ad, you need to have all of these rules laid out so you can both be on the same page from day one. Being caught unprepared leaves the chance for someone to take advantage of you and your property.