Planning to Becoming a Landlord? Keep These Important Things in Mind

While some real estate investors buy and flip homes for selling purposes, others are keen in benefiting from long-term appreciation combined with the cash flow coming from tenants.

As an investor, you’ll have rent from tenants that'll help you cover your mortgage payments and other costs, and you can enjoy tax benefits too. And, ultimately, you can have rental income without the mortgage cost. If you are planning to becoming a landlord, here are some important things you need to know:

Mortgage

Is your property mortgaged? If yes, then make sure to get your mortgage lender's permission before letting the property. Even if you plan to let out only one room in your home, it is crucial that you inform your lender.

Letting the property without your lender's permission can allow your tenants only a few rights if the property is repossessed due to mortgage debts.

In short, make sure to notify your lender that you plan to let your property to prevent your tenants from becoming homeless.

Insurance

Having sufficient landlords' insurance is crucial. It is very unlikely for your normal residential insurance policy to be valid if you keep tenants in the property without the consent of your insurer. This could be applicable, even if you have taken in a lodger.

Speak with your insurance provider to clear any doubts that you may have. Many insurance providers offer policies targeted exclusively at landlords.

Choose an insurance provider that understands the special requirements of a mortgage for rental property.  Make sure they provide a complete policy coverage for a wide range of portfolio protection, including: buildings, rent loss, equipment, flood, fire, earthquake, sewer, umbrella up to $2MM. 

Who do we recommend?  Insured Landlord. Their simple, one form, process alleviates the headaches of dealing with multiple insurance agents/agencies that are not familiar with your insurance minimum requirements.

They understand the complex task that transactional managers, underwriters, and closers have to manage when it comes to the due diligence and closing process specifically for the recent wave of private equity lenders writing blanket loans for small to mid-sized portfolio single family property investors.

 

Management of property

Managing rental properties can be extremely time consuming. Becoming a landlord is like becoming a small business owner – you need to maintain accurate records and provide superior customer service. If you plan on managing your property yourself, you should be prepared for a call from your tenants anytime requiring you to take an urgent action.

If you work full-time or travel a lot, it may be more helpful for you to hire a property manager to look after your rental property. Do a thorough research when choosing a manager and remember that, even if you have appointed a property manager, law requires you to provide your tenants with your name, address and contact number. Appointing a property manager may minimize the interaction between you and your tenants, but you cannot withdraw yourself entirely from this relationship.

Final Word

You should pay attention to market rents, choose a desirable area to make an investment and make sure to keep your property well maintained.

Are you planning to buy your first rental property? Contact Landlord Lenders at 888-375-7977 to access financing to purchase new properties. We offer rental investors the appropriate financial products to help them obtain the cash needed to build their successful rental portfolio.

Grab apartment building loans at 75% LTV and 5-10 fixed year rates.