What It Takes To Be A Landlord

The ins and outs of buying and managing your rental property

for handling complaints. Tenants who nitpick about problems they can fix — like Linda Graves’ tenant who complained about ants following a trail of syrup spilled

on the counter or the tenant who couldn’t turn the doorknob because he had lotion on his hand — can cost you as much time and money as those who neglect to tell you there’s a leak in the roof damaging the ceiling. Landlords should specify in the lease what repairs and improvements are permissible, grounds for lease termination and penalties if the lease is broken. "We ask that requests for maintenance be put in writing," says Lick. "It makes it less likely that they’d hound you every day."

If you hate being on call 24 hours a day to deal with complaints or fear taking a vacation lest there is trouble on the home front, consider hiring a management agency to screen prospective tenants, collect rent and arrange for maintenance of the property. Typical fees run between 5%-10% of the rent. Hiring a managing agent will probably be cost-effective for most small rental investors who own two or more units. And you should realize that the more maintenance and repair work you do for yourself, the more likely you are to have a positive cash flow. But it’s still important to have skilled repairmen you can call on in an emergency or if you ever want to take a vacation.

Whether you manage the property on your own or with the assistance of an agent, you’re responsible for complying with the myriad federal and local laws governing rental units. They include the Fair Housing Act banning discrimination; laws requiring you to inform tenants of lead-based paint hazards; rent controls typically found in New York, California, Maryland, New Jersey and Massachusetts; and local laws like the one in Shaker Heights that requires a biannual inspection of rental units before a permit is issued.

As an investment, rental property takes a lot more work than owning securities. You can’t just leave it alone for years and expect to come back to an investment worth more today than when you bought it. It needs constant maintenance. Remember, even though the property is an investment, it’s still a home.

Is Real Estate a Viable Investment for You?
It is up to you to analyze whether the property will meet your financial goals.

To make that determination, you have to first get your personal financial house in order. Take an objective look at your credit worthiness in the same manner as a lending institution. Correct mistakes on your credit report. Have your down payment and closing costs in place before you go into contract.

When you buy residential investment property, lenders factor in your income plus how much income the property will net. For example, if you have a mortgage on your primary residence, lenders want guarantees that you have enough income to carry both mortgages. Typically, they’ll add 75%

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