It is possible to generate income from property rental if it is done in the right way and you end up with positive cash flow after paying all the expenses. It is not always easy being a landlord and making a permanent income from property rentals requires a certain set of skills. If you want to make a permanent source of income from property rental, here are some questions you need to ask.
Are you ready for 24-hour responsibilities?
Using property management services is an expense worth considering as they will handle management responsibilities in a cost-effective way. They usually have in-house maintenance teams that not only conduct regular inspections but can respond to those calls that can come in at all hours to fix problems. Landlords have to be prepared to respond quickly to calls. Ignoring them or responding slowly is one of the prime reasons tenants give for moving and vacancies affect profitability and continually having to find new tenants can be an expensive exercise.
There are many qualified property services in Murfreesboro with insured and licensed professionals who will take care of all the aspects of managing your property, from screening tenants and collecting rentals to maintaining your home. Reputed property management companies like Evernest, New Again Houses, and PFSuites have expert teams that will look after your property as though it was their own.
Do you have the finances to buy properties?
You are more likely to have success if you can buy a property in cash rather than taking out a mortgage. If you have a mortgage payment every month and tenants default on their rentals, you may not have enough to cover it and this puts you at risk. If you can buy a house with cash, every bit of the income you receive after you’ve paid your expenses is profit. Having the cash to buy the property outright is not essential but it will make earning a reliable income from rental easier.
Do you have the skills to deal with tenants?
Some tenants can be difficult and you need to know the landlord-tenant laws in your state to ensure you don’t violate them. You have to screen tenants carefully to ensure that they will pay the rent on time and take good care of your property. This entails checking their credit history, employment, doing a criminal check and looking at their rental history.
You need to be professional and objective when dealing with tenants and have a rent collection process in place to make sure you collect rentals in full and on time. If tenants don’t pay on time, they have to face the consequences. You also have to make sure tenants stick to the lease agreement and follow up on any complaints from neighbors.
Do you know the right people?
If you want to earn a living from property rentals, you will need quite a few properties in your portfolio. As you expand, you will reach the point where it’s impossible to handle all aspects of the work yourself. You will have to use contractors for maintenance and it helps if you’ve built up relationships with them.
Suddenly looking for plumbers or electricians in the event of an emergency can make call-out services very expensive. If you already have a relationship with contractors, you’re in a better position to negotiate discounts and have relationships with teams you can trust to do the work well and with respect for your tenants.
Can you charge enough rent to cover your expenses and make a profit?
The competition is tough and if you have to cover a mortgage payment, the amount of profit you can make from a single property will not be enough for you to earn a living. If you have more properties, you have a better chance of doing so. If you set the right rent price and minimize your expenses, you may be able to reach your annual income target faster.
If your property is in an area where most investors don’t have mortgages and you do, you have less pricing flexibility. In some locations, you can charge much more than in others. If you try to charge too much in the wrong area, you may battle to find tenants. If you charge too little, you may not even cover your expenses, let alone make a profit.
Are you aware of all the expenses?
You may not be aware of all the expenses you have to take into account as a property owner before you can even think about making a profit. You will have to pay property taxes, insurance, and maintenance costs. You may need landscaping and lawn care and homeowner associations charge fees. If you want to ensure that your property rentals provide a reliable source of income, you need to be fully aware of all the expenses.