Many people think that it’s an easy task to buy a property and rent it out to the “perfect” tenant. Like any other business there are good times and bad. The first thing that you must understand before involving yourself in this type of investment is the fact that there is no such thing as a 100% occupancy rate, it simply doesn’t exist. Regardless of your efforts there will be times that you simply don’t have a tenant (or tenants). Unless you are going to pay cash for a rental property you must be able to make the monthly mortgage payment during these times. If this poses a financial hardship for you than you may as well stop reading right now because this type of investment is not for you.
That being said, you must next ask yourself if you have the proper personality to be successful at being a landlord. There will be times that you will need to respond quickly to tenant concerns. A broken water pipe in the middle of December or a malfunctioning heating system is an emergency and must be attended to immediately. This is not only good business, it is the law and failure to respond in a timely manner could be grounds for your tenant to sue you. Obviously these types of situations don’t happen every day but they do happen. If you aren’t willing to get that 3 in the morning “The basement is flooded!” call than you’d best be prepared to pay a property manager to handle such matters for you.
Your first step towards purchasing a rental property is to decide what type of people you would be most comfortable dealing with. Do you prefer dealing with older or younger clients? Are you better at communicating with higher end clients or is it easier to deal with working class individuals for you? Renting to college students or retired persons is yet another segment of the market to consider depending upon where you would like to invest. Each situation is unique and will require a different “approach” in order to keep your tenants (and you) happy.
Once you have found an investment property that seems to fit all of your criteria there are some basic rules that you will want to follow if you intend to be successful over a long period of time. Above all, be respectful and courteous to your tenants; return phone calls immediately and always respond to repair requests promptly, even if they are not an emergency. Communicate your needs clearly and be sure that your tenant(s) understand what is and is not allowed. And finally, notify your tenants well in advance of important matters such as scheduled maintenance on the property, plans to increase rent or any other situation that will impact their lives while living in the home. Remember, it is your house, but it is their home.