Skip to main content
_FB_2018-Icons-finalized-cleaned-up_new_FB_2018-Icons-finalized-cleaned-up_newGroup 9
Back
Scroll to top

5 Things You Need to Know Before You Become a Landlord


Hey, here’s a great idea! You know that extra house, apartment, or in-law suite you have sitting around doing nothing? Why not lend it out to people and make some fast cash? What about that house for sale down the street? Why not buy it and rent it out? Seriously, how hard could it be to be a landlord?

Not so fast, eager capitalist. Whether you want to be a landlord as part of an overall investment strategy or just because you can’t sell your house and want to move, you need to take the time to think things through.

Here are 5 items to cover before you decide to become a landlord.

Run the numbers.

Does being a landlord actually make financial sense for you? It’s the most obvious question for any business owner, and make no mistake—when you’re a landlord, you’re running a business.

Consider all of your costs, including your mortgage payment, insurance, repairs, marketing, and the value of the time you’ll spend managing everything. Then, compare similar rental properties for a clear-eyed look at the kind of monthly income you can reasonably expect.

Now ask yourself: is renting that property worth it?

Of course, you may already be sinking money into a property you own. That might change your financial calculations—even if you don’t break even, you might still be able to recoup some of your investment.

Or it might be better to just sell the property. You need to run the numbers to know.

Look at the legality.

You know the contracts you’ve signed when you’ve rented properties? You’ll be responsible for those now.

You’ll also want to stay on the right side of the law, which varies by state. For example, here’s a guide on landlord/tenant law in North Carolina. And here’s a chapter on Landlords and Tenants from the North Carolina General Statutes. Don’t worry; you don’t need to memorize all of this information. But you should make sure you understand your responsibilities and obligations as a landlord.

Ultimately, you might want to work with a lawyer. In that case, add those costs when you run the financials.

Master marketing.

Putting your property on Craigslist or another online listing service is just the beginning.

You’ll also have to give tours of the property and make sure it’s in viewable condition. You could hire someone to do this for you, but once again, that will add to your overall costs.

Prepare for management and maintenance.

Depending on the lease agreement, landlords can be responsible for a wide variety of property maintenance.

This isn’t just to keep the current tenant safe and happy—it’s to keep the property in good condition for future tenants or buyers. This could mean anything from refreshing a chipped coat of paint to climbing out of bed to fix a broken toilet at 3 in the morning.

Want to hire a property manager or maintenance person to deal with this for you? Sure! But you guessed it, you’ll have to add it to your costs.

Expect the unexpected.

Tenant behavior can be unpredictable, even if you try to get the best-behaved occupants possible. You’ll need to be ready for unpleasant surprises.

Even if you hire a management company to run the day-to-day affairs, there will still be decisions that only you as the owner can make. If the air conditioning unit needs to be replaced, your property manager might have to give you a call. Plus, you still need to find people you trust as property managers.

Despite its challenges, being a landlord can be very rewarding. For a frank discussion on what to expect, and how renting a property might fit your personal financial situation, talk to a mortgage banker at First Bank.

 

Work with a local mortgage specialist

Trending Topics

Best Savings Account for Kids – Wilmington NC

If you live in Wilmington, NC, and you are looking for the best savings account for your kids, visit your local First Bank. We offer a savings account for kids that comes with all sorts of...

Small Business Payroll Services

If you’re like many small business owners, it’s likely that you wear many hats and are always on the go. From managing to accounting, there are multiple tasks you have to manage each day. Simplify your...

Bank Accounts for Businesses in South Carolina

Do you own a South Carolina business? Are you looking to start one? There are a number of reasons why South Carolina is a great state to do business. And First Bank* is here to provide the bank accounts, tools and services...

Forbes Names First Bank as Best-In-State Bank

First Bank was named the best bank in North Carolina by Forbes.com.

Best Student Checking Accounts – Wilmington NC

First Bank in Wilmington, NC, offers a student checking account designed with college students in mind. With one major university, two private colleges, and a community college, there’s no shortage of individuals...

Best Small Business Bank – Albemarle, NC

If you’re looking for the best small business bank in Albemarle, NC—the search stops with First Bank. As a local bank, First Bank has a reputation for being an instrumental part of small businesses. Our...

Hassle Free Checking Account Near Me

At First Bank, we don’t believe in charging unnecessary fees and diminishing your hard earned cash. That’s why we offer five options for hassle-free checking accounts provided you meet some basic monthly...

11 Easy Tips for Saving Money

Saving money is important if you want to be prepared for future financial surprises or hardships and establish peace of mind. But sometimes, finding extra funds to set aside is a challenge. These simple money saving tips...

Lock It Up: Protect Your Login Info

These days an increasing number of people are online creating accounts for shopping, streaming services, or to stay connected with other people. Of course, with all those accounts on various websites, who wants to create a...

Best Personal Checking Account Near Me

If you’re looking to open a checking account near you, visit your local First Bank today. Whether you want a basic checking account or a premium checking account with benefits, First Bank has a variety of...