Brown’s not concerned by the fluctuations in the real estate market. Rather, she’s focusing on the long-term value of having a steady stream of rental income. “I don’t want to rely solely on a job to survive,” she says. “I want to be able to generate a comfortable living while I sleep.”
• Don’t depend on rental income. Whether you end up with a deadbeat tenant or your tenant decides not to renew his or her lease, there will be times when you’ll need to have money set aside to pay the entire mortgage amount. When calculating her monthly budget, “I imagine myself without the rental income,” Brown says. Brown’s real estate lawyer also created a prepaid contract for her to send to tenants who have not paid their rent. “It’s a warning proceeding with an eviction,” she says.
• Protect yourself. Brown requires all tenants to pay first month’s rent, security, and says she puts everything in writing. Furthermore, she advises landlords to get additional homeowners insurance to protect themselves from a fire or if someone gets hurt on the property.
• Use digital tools. When Brown was searching for her home on Craigslist.com and other property sites, she still had a licensed real estate agent check the property out. She also uses online listing services to advertise her apartments, come up with rental rates, and screen tenants. For example, E-renter.com runs credit checks and filters out those with credit scores below a designated point, and PropertyShark.com helped Brown create landlord verification forms and provided tips on apartment advertising.
• Build good tenant—landlord relationships. A happy tenant is more likely to renew his or her lease. “If they’re loyal about giving you their money every month, you need to be just as loyal if they have a splinter hanging out of their wall,” she says.
n Take advantage of tax deductions. “You can write off or itemize anything from the paper you buy to print rental applications, to repairs, renovations, and even my own utilities because I provide electricity and heat to the main landings,” she says. “Make sure to save receipts for everything.”