Marita Tasse's Blog
29 Cricket Dr, Sturbridge, MA 01566
Maybe you’ve thought about buying rental property. Wouldn’t it be great, you think, to own something that someone else pays for? It can work out that way, with your property increasing in value while you pocket money every month. But with the wrong home, the wrong tenants or the wrong management, it can go horrendously sour. Here are eight ways to make your first venture as a landlord a successful one.
Start small. Buy a single house, townhouse or condo rather than an entire apartment building.
Decide how much work you’ll take on. Are you a DIYer? Can you make minor repairs yourself? Are you willing and able to recruit tenants and deal with them on an ongoing basis? If this isn’t you, you’ll be wise to hire a property management company to handle these items.
Really, really, understand your income and expenses. Project them forward 5 to 10 years and make sure you have a margin. There’s more than mortgage, taxes, insurance and utilities. There also can be landscaping, pest control, landlord insurance and minor repairs. Be especially aware of big ticket items. If you’ll need a new roof eight years from now, set aside for it. Be aware of property tax trends so you won’t be caught be surprise. Consider what will happen if a tenant leaves and your property is vacant for several months.
Arrange financing in advance. Most mortgage lenders will pre-qualify your loan. It helps close the deal if you can show this to a buyer.
Know the neighborhood. If you’re not familiar with it, drive around. Talk to people. Research it online.
Learn how to be a landlord. Talk to other landlords. Join a landlord’s association. Familiarize yourself with tenant rights and local regulations.
Know your tenants. The right tenants can make your experience a joy and the wrong ones can make you rue the day you got into this business. Use a screening service. Have a written lease ready to go and specify exactly what is expected: when the rent is due, what the grace period is, what’s the penalty for being late, who pays utilities, what - if any - maintenance the renters are required to do. Insist on prompt rent payment right from the get-go. No matter how much you like your tenants, it's imperative to keep the relationship professional. Visit your property from time to time. You’re not permitted to barge in, but a drive-by can tell you a lot.
Keep business and personal finances separated. Maintain separate bank accounts and credit cards. Be clear on which is which for record keeping and tax accounting.
People have put children through college and financed their retirement through rental property while also working at paycheck jobs. But being a landlord is not for the timid, the inflexible or the careless planners. Think before you make the leap, and if you decide to go for it, all the best!
Whether you're looking to buy a house or sell one, a helpful saying to keep in mind is the one about recognizing a duck:
"If it walks like a duck, quacks like a duck, and looks like a duck, then it's a duck!" As silly as that expression may be, there's a lot of wisdom in its message.
The reason it applies to real estate transactions is that people sometimes tend to overlook, justify, and gloss over potential or actual problems that need to be dealt with (and not ignored). Here are some examples, as they relate to home sellers and buyers:
Selling a home: As a home seller, one of the most important things you can do to make your home more appealing and marketable is staging. Not only is it beneficial to apply a fresh coat of paint where needed, but parts of your home may need to be repaired, upgraded, touched up, or cleaned.
One false assumption home sellers sometimes make it that prospective buyers won't notice or care about broken tiles in the bathroom, peeling paint on the front steps, cracks in the ceiling, or mold in the basement. While there are a lot of factors that help sell a house quickly or cause it to linger on the market for months, sometimes it's the little things that can impact the desirability of a house. If there's an imperfection, flaw, or cosmetic problem in your home that you've been noticing for months or years, there's a good chance prospective buyers will take note of it, too.
Whenever you can affordably correct a cosmetic problem in your home or property, it will usually be to your advantage as a home seller. If the problem looks like it could be a potential deal breaker, there's a chance it will be.
When you need an objective opinion on matters such as home staging, curb appeal, or increasing the marketability of your home, an experienced real estate agent is often your best source for advice and guidance.
Buying a home: There are a lot of factors that need to be evaluated when searching for your ideal home. While optimism is an essential state of mind to cultivate when you're navigating the sometimes bumpy road of house hunting, it's also important to balance that positive attitude with a drop of caution and skepticism. If you get too caught up in the excitement of buying a new house, you might miss red flags along the way that could lead to future problems or expenses.
By hiring a reputable property inspector to check everything in the house from structural integrity to the condition of mechanical systems, you can be alerted to potential safety hazards, possible water damage, malfunctioning electrical circuitry, and dozens of other issues that need to be identified, and hopefully resolved, before you become the new owner of a house.
Your home is on the market, but you still live there. Now your agent called to see if a potential buyer can look at it in an hour. What do you do?
You Don’t Need to Panic
Instead of holding your head in despair, grab some tools, and clean the most visible areas of your home.
- Sweep the front porch, steps and any cobwebs lurking in the corners. This is the first place your buyer sees, so it gives them an impression they’ll carry into the rest of the house.
- While you’re at it, use the broom to give the front door a once over. If you have a cloth handy, use that too. If your door is glass, remove smudges from the kids and dogs. You can use vinegar and water, glass cleaner or simply warm water.
- Grab a laundry basket and clear clutter from your entryway. Grab stray boots and shoes, hats and coats, school bags and anything else that gets dropped there. Put the basket in your car. You can organize it where it belongs later. Pick up any mail too and stick it in a drawer.
- Sweep your kitchen floor and run a damp mop over it in the high traffic areas. To simplify this for the future, invest in a mop with a bottle of cleaner attached — no need for buckets.
- Light a candle or diffuse essential oils in the kitchen to remove any odors from last night’s dinner.
- Replace all the towels in the kitchen and baths. Set aside towels just for this purpose so that you always have a clean, matching set.
- While you’re in the bathrooms, run a damp paper towel over the faucets and fixtures, wipe out the sink, and run a quick brush around the waterline of the toilet, then flush it.
- Grab all the trash from your trash cans in the kitchen, bathroom, office, bedrooms, and laundry room. If you have a container in your garage, put it in there. Otherwise, throw it in a nearby dumpster(law permitting). Just because you can’t smell it doesn’t mean your visitor won’t notice.
- If you have time, take a feather duster to dark, visible surfaces, light fixtures and art frames.
Finally, grab your family and the pets, hop in the car and head to the park. You don’t want to be near your home while the agent is showing it to buyers. When you’re nearby, the folks visiting might not feel free to ask the questions they need to. When they’ve gone, head back home and reach out to your agent for feedback.
The more you know about the process of buying a house, the better prepared you'll be for doing it successfully.
How might you define "success" when it comes to purchasing a home?
There are a lot of standards that could be applied to successfully navigating the home buying process, but here are a few that immediately come to mind:
- Finding the house of your dreams: While very few people find a home that is absolutely perfect in every way, it is possible to come close to achieving that ideal. Although a certain amount of flexibility goes a long way, knowing what you want and prioritizing important features are among the main prerequisites to getting what you want. As baseball legend Yogi Berra once said, "If you don't know where you are going, you'll end up someplace else." Thanks to the variety of websites devoted to home ownership, home decorating, remodeling, and landscaping, it's easy to find pictures online that can help inspire your imagination and clarify exactly what the house of your dreams might look like.
- Minimizing setbacks and frustrations: The process of house hunting is a journey that often involves bumpy roads, detours, and dead ends. One secret to getting through it successfully is to work with an experienced real estate agent who knows the ropes and can keep you on track. It also helps to approach house hunting with a sense of optimism, resourcefulness, and commitment. Although you probably have a lot of competing priorities in your life, finding a house that you and your family will be happy in for the next few years deserves a top spot on your list!
- Avoiding unpleasant surprises: Knowing your credit score and understanding the impact it will have on getting loan approval and a favorable interest rate will help prepare you for the financial side of buying a house. The ability to get prequalified for a mortgage and come up with sufficient down payment will also set the stage for a successful home buying experience. On the plus side, a higher down payment can potentially result in a lower interest rate and not having to pay private mortgage insurance (A 20% down payment is necessary to avoid PMI.) Since many loan programs and lenders require at least a 3-5% down payment, that can be a stumbling block for first-time home buyers. To purchase a $200,000 home, for example, you'd need to come up with a cash outlay of between $6,000 to $10,000 -- not an easy feat for everyone!