As a 28 year landlord (who still feels like she’s “28” some days – thank you VitaMix) – the school of hard knocks has learned me well and I’m still learning every single day. I found this article from my friends at Baird & Warner and thought it worth reprinting. While this article spotlights just 3 things…there’s easily 103 things I would advise on for prospective clients & business friends also in the game. Read on and at any time please ask me about All Things Real Estate related….ciao.
Anyone looking to earn some passive real estate income has probably thought about purchasing an investment property to rent. But whether you’re thinking about buying a single-family home or six-flat, as a first-time landlord you’ll likely have many questions. Here are the 3 things to consider before you take the plunge to become a lessor:
1. It’s Not Show Friends, It’s Show Business
Even if the investment property you purchased is a passion project, being a landlord means you often need to take the heart out of decision making. For example, avoid renting to family and friends as this is a business venture. Set office hours so tenants know when you’re available. And be clear about penalties for breaking a lease or late rent. It’s also smart to take photos of your property before and after a tenant moves in.
2. Build a Budget
Before you can build equity, you first need to build a budget. Chances are there will be a delay before you start earning steady rental income, especially if you have to make any improvements to the property in addition to covering the mortgage before it’s tenant-ready. Make sure to prepare for any lapses in rent collection —- either due to a delay in leasing the unit(s) or some other blip.
3. Think Ahead to Tax Time
Seek the advice of an accountant or tax planner with experience working with landlords so you know how to organize expenses going forward, and understand which documents you’ll need at the end of every tax year. Also, consider how your planned income will affect federal and state taxes.
Taking the step to become a landlord is an exciting one, and I can help you find an investment property if you’re ready.
“Any investor would be curious to see how these factors affect the market on the micro level. Millennials have shown a preference for renting rather than buying…”
READ MORE HERE…https://www.auction.com/blog/investing-chicago-real-estate/
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