AJ and I are excited to be moving to our new place soon and people often ask how we are selling our current 2-bed/2.5 bath condo. We were always looking at investment properties and decided this will be our first one together to try our hand at becoming landlords. Here are 5 things we learned along the way to making that decision.
- How much income are we trying to generate? Ideally, we’d like to make out ahead with a few extra bucks in our pockets, but because we bought the house on a 10-year mortgage (thinking we’d pay it off in five) and we’ve lived in it less than a year, our monthly payments are higher than what we can feasibly charge for rent to make money. That being said, we decided our goal was to maintain the property for as long as we can until it hopefully appreciates, or that we own it free and clear and becomes a true income property down the line.
- Do we have the patience to deal with potentially troublesome tenants? Once we told friends and family we were looking to rent our place out, all we got was everyone’s horror stories of chasing tenants for rent, evictions and the like. We are likely not going to have amazing tenants all the time either. We thought long and hard if we are willing to put up with those worst case scenarios, and in this case given the neighborhood and the rent we plan to charge, we are willing to take that risk.
- Do we know what to screen for? I assumed being in human resources that many of the same no-no’s applied to interview questions for tenants (race, gender, religion, etc), but what else should we be looking for. We did our research and found this question guide to be very helpful.
- Should we allow pets? We initially decided we had a no pet policy, but every person that came to look at our property had at least a dog, if not more. We are now rethinking that and being flexible, but plan to enforce a very strict pet policy along with a refundable deposit to make sure they take care of the place.
- Do we have the funds to cover vacancies and maintenance? It would be unreasonable to think that no issues will come up as new tenants move in and out of the property. Hopefully we can mitigate vacancy rates by selecting long-term tenants, but we need to make sure we don’t put ourselves in the hole if the property sits empty during turnover. We plan to have at least 2-3 months worth of rent to cover vacancies as well as any maintenance we may need to do.
We have our first tenant interview today – wish us luck!