How To Become A Landlord

If you’re interested in owning property and renting the space to tenants, then you’ve already started on the first step to becoming a landlord. There are a few key considerations before you jump in, and we’re here to walk you through them. Let’s begin with some basic questions.

What Resources Do You Have?

There are two major resources that determine how you pursue your investment path to becoming a landlord.

Money
Time

How Much Money Do I Need To Become A Landlord?

The amount of money you need to buy a piece of property varies significantly. Your current financial situation is the main determining factor. Here are a few questions you can ask yourself to better gauge where you stand

How much extra do you have to invest?
Will I have to get a mortgage on the property?
How much will the monthly payment be?
When will I pay it off?
Are the property values in my area going up or down?
Will it be easy to find renters?
Do I need to leverage assets for a loan?

Depending on how you answer these questions, you’ll be able to determine where you’re at in terms of capital and the size of the deal you can undertake as a landlord.

What Is The Current Value Of Your Time?

If you’re just out of college, have minimal investments funds, or aren’t experienced in the field yet, then the best way to start in real estate is to learn the basics. Focus on educating yourself. The most important thing in self-study is to learn before taking any action. You want to have a baseline education where you understand real estate and you are financially literate. This means knowing all of the terms, people, and parties involved in different types of opportunities. Don’t jump in too fast or worry about missing out on a deal. In time there will be many, and you will save yourself way more headache than money you would have made by skipping the first deal. Be informed, and don’t start when you’re not ready.

Real Estate Strategies For Beginners

There are a lot of different terms and jargon in real estate, and having a basic knowledge of the types of deals you can pursue will help you find which are best to pursue.

House Hacking

House hacking a property is when you buy a property and move into it while also renting out rooms or other units to earn rental income that will cover your monthly expenses and hopefully more. This can be done by either buying a single family home or apartment. You live in one room and rent the others out to friends or family. You can also upgrade by buying a duplex triplex or quadplex and renting the other units out.

Wholesaling Real Estate Opportunities

Wholesaling real estate opportunities is when you get a property under contract and assign the contract to someone else at a higher price. The margin is your wholesale fee. For example, you find a single family home for a good deal. You get it under contract for $100K and find a buyer who will pay $110K. You assign the contract to the buyer, and you get paid the $10K spread. The seller still gets $100K, you get the $10K, and the buyer gets the house they want. All three parties win.

Bringing A Deal To A Partner

This is when you find an opportunity that is beyond your current capabilities or financial limits. You then partner with someone who has the resources to take down the deal. For bringing them the deal you get a piece of the equity or fee. The more value you add to the deal, the more equity you will get. Partnering also allows you to take on bigger projects by partnering with people who have the experience and capital necessary to take on the deal.

Final Notes To Consider

What Stage Of Your Career Are You In?

If your purpose is to build wealth, then the key is to focus on what makes you the most money. Create extra time to do what makes you the most money. If you want to become a landlord because you find it exciting and you want to make it a profitable hobby, then you should research and find a deal that fits your criteria. However, if the most profitable use of your time is elsewhere or at your job then you can still find ways to get involved in real estate by passively investing. Learn more about understanding how your career can help you earn more in real estate by reading, “Generating Passive Income By Investing In Self Storage”.

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