Being a profitable landlord requires a mindset of it’s own. You will have to think long term, short term, figures, social impacts, and so the list will grow. You might even feel that you might not have what it takes. But this is not so, for any one has the capability to make a few extra bucks by growing their property portfolio though the responsibility of landlordship. Our 5 Traits of a profitable landlord will help you well on your way to financial freedom.
1. Find your Inner Accountant
Landlords tends to be number crunchers. They sit and run different scenarios after the another to make sure the financial path they choose to finance and maintain their properties are the best. I say the best and not the cheapest, because cheap doesn’t always mean value for money.
A landlord should first determine the correct rental rate for their individual properties. Once a monthly rental income is determined you should turn your focus to the expenses. Keeping your cash flow alive is VITAL to the success of your property investment.
Consider:
- Mortgage
- Property Tax
- Insurance
- Utilities
- Maintenance Cost
- Vacancy Rates (work on 10%, to be pessimistic)
- Property Manager – You might need one if this is all new to you:)
Simply deduct the expenses from the income and see what you are left with. Chances are that you might have to add a bit of money to cover the initial expenses. This is understandable, especially if your mortgage is anything over 40%. Consider the amount and see if your personal saving/spending account could handle the extra monthly down payments.
Remember at the end of the day you will own this property, not the bank:)
2. Know your Real Estate
A profitable landlord will research an entire area with their neighbourhoods. You will need to know as much as any other Real Estate agent about property, their trends, their patterns and their future predicted developments.
To find the right property in the right location you will have to consider what your future tenants might need and want.
Consider:
- Public transportation
- Shopping
- Hospitals & Clinics
- Parks & Entertainment
- School Districts
I would always suggest that you take a walk in the hood, drive by several times, drive and walk by at different days and hours. Also speak to the people in the neighbourhood, you never know what you might learn. I would also recommend speaking to the small businesses in the area, they tend to share a lot of history.
Get to know what you buy, before you buy
3. Fair, that’s the landlord way.
Landlords might feel the desire to want to be nice to all their tenants, to be their friend in some weird way. The honest truth is nice guys finish last, instead of being nice, be professional and be fair at that. Never be the landlord that looses his temper, or that crawls away every time a tenant brings a concern to light. Be the landlord that is reliable, professional, friendly and fair also remember timely.
Make sure your tenant knows what they can expect from you, so you can know what to expect from your tenant.
4. Get a A-Team list, your going to need it
For many the landlordship is a side business, something extra to grow the pension. But the honest truth is that landlordship takes its sweet sweet time in maintenance and emergency oops-es. Ensuring it takes far more that ever anticipated. It is for this reason that it is essential that you build yourself a A-Team of professionals that can help you sort those maintenance and emergency problems go away, especially in a timely manner.
Profitable landlords build a wide network of professionals to keep their emergencies away
5. Profitable Landlords are Organised
In order to keep your sanity at bay I would say that profitable landlords are organised, they manage this by keeping the admin up to date, monthly.
They tend to keep a close eye on:
- A copy of the Lease Agreement for the tenants and the landlord – Signed and dated by both.
- A copy of the Checklist
- Checking that the rent is paid on time every month
- Pay the Property Tax, Utilities, Levies and Insurance
- Keep a Schedule of when the next property inspection will be. This is to keep another close eye on your tenants as well as the properties.
This is but only our immediate 5 traits of a profitable landlord, there are many more. I’m sure you will discover your own traits and needs on your journey to financial freedom . If you however feel that property is for you, but you lack the time and knowledge then please drop us a mail. Mafadi specializes in making their landlords happy, by enhancing their financial growth.
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