Everybody wishes they could make a little bit more money, maybe even retire early. For many of us who know little about the stock market or aren’t banking on winning the lottery, however, it can be difficult. Luckily, there’s one form of passive income that almost anyone can tap into: renting out property.
Research the Local Rental Market
Before you dive headfirst into the landlord lifestyle, you’ll want to do some research about your local market. Most importantly, you’ll want to find out as much as you can about the competition. For instance, if you live in North Carolina, before you start renting out Jamestown apartments, it’s important to get an idea of what North Carolina landlords are charging their tenants. Keep in mind, it’s not just the dollar amount that matters, but what qualities and amenities people expect for the price you’re asking.
Learn the Ins & Outs of Housing Law
Whenever large sums of money are being exchanged, there are going to be lots of different laws and stipulations to worry about. While it’s easy to find generic lease agreement templates online, you should still study them carefully and consult with a legal expert before signing anything or asking anyone else to sign anything. It’s crucial both for you and your tenants that everyone’s rights and responsibilities are clearly stated, understood, accepted, and lawful.
Pick the Right Property to Invest In
If you don’t already own a rentable property, finding the right one to invest your money in should be a top priority. A general rule of thumb is to avoid properties in neighborhoods you’re not familiar with. If a property seems too good to be true, it probably is. High crime, a poor economy, and structural issues are just some of the things that can make a property more affordable, but they could also scare off potential tenants or even cost you more money in the long-run.
Take Out a New Insurance Policy
If you think that a standard homeowner’s insurance policy is all you need to begin renting out property, you might be in for a rude awakening. Landlord’s insurance is usually about 25% more expensive than traditional homeowner’s insurance, so keep that in mind when setting your budget and determining your rental prices. Fortunately, your current insurance provider might be willing to work with you on creating a policy you can afford, so the sooner you contact them, the better.
Get Your Property in Renting Shape
Unless the property you purchased for this endeavor was used for rental previously, chances are it’s going to need some work to convert it from a “normal” house into a series of separate apartments. This could mean knocking down walls, erecting new ones, rewiring the electrical system, changing the locks, creating new entrances, or building additional bathrooms. It might seem like a lot of expense, but a well-run rental property can provide you a steady income for the rest of your life.