become a landlord

Become A Landlord: How To Buy And Manage Properties

Do you want to buy a rental property and become a landlord for additional income? As someone who spent a lot of time researching becoming a landlord and ultimately walking that path, I have an excellent handle on what it takes to be successful.

Here’s everything you need to know about becoming a landlord, from finding a property to profiting to avoiding headaches and more!

How To Find a Rental Property

The first step to becoming a landlord is finding a rental property. Many factors go into finding the perfect property, so this isn’t a process you should rush.

As you search for potential properties, consider doing the following.

Study the Demographics

Before you consider making a real estate purchase, you must understand which neighborhoods are healthy and growing vs. which have high crime and drug use. While the high-crime area might seem to produce the best bargains, the long-term outlook of these properties is terrible.

Look online at Zillow or Trulia and study which areas are increasing in value and which properties are the best rental options. After looking at the numbers online, visit these neighborhoods to see who lives there and how well they maintain their yards and homes.

By studying the demographics first, you immediately save time by not reviewing homes outside your desired demographic.

Know the Rental Property Values

If you want to earn an income with this property, you should know what you can expect to charge for rent. Sure, the house might seem like a deal given the area, but if the typical rent amount does not cover the mortgage costs, it certainly is NOT a good deal for you.

If the rent will cover the mortgage expense, utilities, and maintenance each month, you likely have a decent deal on your hands and should pursue this option further. 

Zillow offers a rental estimate that you can look at as a reference point to get a rough idea of what you might be able to charge.

Find a Project Home

As a rule of thumb, if you find a house that is completely renovated and updated, you will not get a great deal on the property. It just doesn’t happen. However, if a home has ugly orange walls inside, you might get a $5,000 discount.

When I look for homes, I look for ugly houses that can easily be turned into beautiful dwelling places for families. One of my homes had ugly, worn-out carpet that needed replacing. 

However, instead of looking at this as an annoyance, I took a peek under the carpet and saw beautiful hardwood floors that were original to the house! I paid $20,000 less than what the house was worth, got the floors refinished for $3,000, and had a home worth more than what I originally paid.

You might not be the handiest person, but there are still many things that you are capable of doing. Painting is simple and can add much value to any home. Tearing out carpet can be done by anyone, as can vacuuming and cleaning. 

Tackle projects you can handle, and add tremendous value to that ugly house.

become a landlord

Take Your Time When Searching

Far too often, people get it in their heads that they want to invest their money and feel as though they need to take action NOW! Sure, this life moves by quickly, but that doesn’t mean we should rush into investment options that make no sense. 

I have seen this happen with many of my friends. They have a great idea (such as buying a rental or getting out of a car lease), but because they have no patience, they make bad decisions and end up costing themselves money in the long run.

Wealth does not typically happen overnight, so don’t plan on making a large financial move tomorrow. If you are searching for a rental property, plan on searching for six months to a year before finding the right property.

Have a Large Cash Reserve

As with any business, cash is the key to survival. The same is true for rental property investments. Houses require upkeep, and that upkeep will cost you money. 

Sometimes, your rental homes will only require a hundred-dollar fix here and there, but other times, you might have to drop $2,500 on a repair. If you want to get into the real estate game, you must also have an emergency fund set aside for the properties.

As a rule of thumb, plan to set aside 10% of the house value for repairs. This will enable you to act quickly for your renters (it’s always a good idea to serve your customers well) and will protect your large-dollar investments for the long term.

Tips to Profit From Your Rental Property

Once you have a rental property, you have to manage it in a way that produces a profit and benefits your net worth. Plus, you likely have a mortgage to pay on it while recouping your down payment costs.

To ensure your venture into being a landlord is profitable, remember these tips.


Just because I have extra cash each month doesn’t mean I spend it. Quite the opposite, actually. I live like I am paying the full amount, but I take the extra and either make additional mortgage payments, save, or invest.

The extra payments save me a lot of interest in the long run, and the savings and investments are all going to my next place. I could even buy another condo in my building, move there (with a primary residence mortgage), and rent out my current unit for profit.

It’s All About Cash Flow

The key to real estate success lies in the cash flow. If you are going to sink a lot of money into owning the property, it needs to pay a stable return that covers the monthly expense plus a comfortable profit. 

Remember, as a landlord, you are responsible for repairs to the property. Take that into account when calculating the rent.

Scale It Up

That is just the beginning. If you are smart with your rental profits and continue to save, you can buy another property. And another. Keep going.

Eventually, you can find economies of scale in the repairs and expenses. You can build a nice portfolio of properties and earn enough to cover the vacant periods and turnover. Then, you slowly start paying off the loans, increasing your profits.

You go from $500 a month to $1,000. That grows to $2,000. There is no limit from there. You can make as much as you can afford to invest. If your real estate investment business grows enough, you can make a full-time living.

If it grows enough from there, you can earn a full-time living while hiring a property manager to take care of everything for you. The sky’s the limit.

being a landlord

How To Simplify Being a Landlord

Being a landlord can be a lot of work, so finding ways to streamline the process is essential. When asked for tips about how to simplify things, here are the top suggestions landlords shared with me.

Keep It as Passive as Possible

Phillip Taylor of PT Money, a good friend of mine, had only good news from his property in Texas, which he manages himself:

“My property has been extremely passive after onboarding the tenant. I collect rent by Chase Quick Pay, which is free and takes me about 1 minute a month to “accept” the payment.

The property is relatively new, so we only had one repair, which the tenant made himself and deducted from the rent. The property is also a townhome, so that means no outside upkeep or repairs. It’s almost too passive, really. I forget about it until I see the rent payment.”

Hire a (Good) Management Company

A landlord who wanted to remain anonymous for this article shared:

“There are different opinions on this, but I’ve been thankful I hired a management company. They collect the rent, and if the toilet breaks, I’m not going to get a call in the middle of the night.

It’s worth it to me to pay them a small fee (a tax-deductible expense) to deal with any problems, especially since I don’t live near the property. This particular company manages hundreds of properties in the area, so they know all the best contractors and tradespeople to hire. By sheer luck. I’ve had no tenant horror stories.”

Hiring a management company or property manager comes with a caveat. You must choose someone good. I’ve worked with horrible property managers in the past, leading to a stressful situation with poor communication, no tenants, and lost money.

Do your due diligence when hiring someone to manage your rental. Make sure their Yelp reviews are solid, not just from family and friends, and check references to ensure they know what they are doing.

Keep Your Anonymity

Andrea Amir at Smart Money Chicks encourages separating emotions from being a landlord.

“I try to never let the tenant know that I am the owner. When they know you are the owner, they seem to think they can play on your emotions. Instead, I am the “manager” who has a boss who is not that nice and will not allow me to insert crazy thing they ask for here.”

Thoroughly Screen Your Tenants

Martin Dasko is a friend, professional wrestler, and property manager. Unless you want a bodyslam, it is best to keep this landlord happy. 

“My story… Always screen well. Never ever settle. You’re better off missing out on rent and holding out than you are with just taking anyone.

I personally screened to the point that I knew everything about the person. You are trusting this individual with a HUGE asset. You wouldn’t just let anyone come over for dinner? Why let a random person move into your home? 

Screening also ensures that you have less problems down the road (hopefully). You always want to know where the person works.”

Brandon Turner from BiggerPockets shared similar sentiments:

“I recently had a nice couple apply for an apartment. They seemed great – until I ran their background check. Two evictions each. Oops – they forgot to mention that.

Last week, I got a phone call from a prospective tenant. They asked what our screening qualifications were. I told them what we required, and she said, ‘What about Manslaughter? I killed my husband a few years ago.’”

Tips to Succeed as a Landlord

Being a landlord isn’t all unicorns and rainbows. There are risks and costs with starting up.

I asked some blogger friends about their experiences as a landlord, and they were very mixed. Some had great winning stories, and others had some tenant horror stories. Here are some of the stories they shared.

become a landlord

Don’t Let Repairs Eat Away at Your Profits

Brad Chaffee at Enemy of Debt had a warning based on his experiences.

“Be careful how much you spend on remodeling/upgrades before renting. We were taught a $12,000 lesson the hard way, and that’s not counting how much it cost us to upgrade before taking on renters.

We went through three renters in two years, all of which destroyed our home in their own little way. Wood floors, carpet, doors, and drywall were shot and needed to be repaired or replaced. It ended up being such a hassle and cost that we decided to get out of the renting business.

Maybe we’ll do it again one day when we’re able to be more patient with our application process. There’s probably a great positive story for every negative one, but I think the main thing is being financially ready to handle the costs associated with being a landlord.”

Handle Tenant Problems Immediately

Emily Chase Smith is an attorney for landlords with holdings at mobile home parks, and she had advice on problem tenants, which are not uncommon for landlords regardless of their property type.

“My biggest piece of advice is as soon as you have a problem, the rent’s not paid in full, they’re partying loudly, they’re not maintaining the property, serve a legal notice and document, document, document. 

When and if it all gets crazy (and it does), you don’t want to start serving notices and documenting. Not only will you not want the tenant to have a long, rent-free stay, but you don’t want people in your rental who know they aren’t staying long. That’s when the bulk of the damage is done.”

Keep Things Professional

Rebecca Stapler, owner of Stapler Confessions, is another property lawyer with thoughts similar to Emily’s.

“I’ve never been a landlord, but I have represented over 60 tenants facing eviction. If I were to be a landlord, I would treat it like a business and separate my emotional involvement with the business as much as possible. 

Also, landlords should follow the proper procedure as soon as it’s appropriate. Those procedures will alert the tenant that the landlord is taking the problem seriously, and it will assist the landlord in the eviction process, if necessary. 

In that vein, as a small business owner, the landlord should establish a relationship with an attorney who specializes in landlord/tenant law so s/he can come out of the eviction process as unscathed as possible.”

Consider Being Pet-Friendly

Doug Nordman is a military veteran and has been a landlord near bases. He has made it nearly 20 years without any major horror stories but has some advice for any smart landlords on pets.

“We meet a lot of very grateful tenants by advertising our property as ‘pet friendly.’ We can occasionally get away with not replacing the wall-to-wall carpets between tenants, and I think that the pets cause a lot less damage than their owners.”

Get Insurance 

My friend Kylie Oifu was a landlord down under for quite a few years and has had experiences with both wonderful and horrible tenants. Laws are different in each state, let alone country. If you want to see some scary damage photos, check out her post on one tenant who treated the home like a trashcan.

“Having previously been a landlord in Australia, I learned a lot and did have some horror tenants who trashed my house. I had to evict one set of tenants when they breached the lease by having pets, and thankfully, they left with no issues.

The last tenants in the property were great; they paid on time, let us know when there were any issues, and were very easygoing. Too easygoing, it turns out.

When they moved out, the house was cockroach-infested, mold was growing in most of the rooms, and the house basically had to be gutted. Landlord insurance helps with things like that, but it was a lot of time and effort to repair.”

become a landlord

Don’t Overreact

Lance Cothern at Money Manifesto had this story to share and is a great example of why patience and understanding can sometimes be key.

“I became a landlord this year when we rented out our old townhouse. So far, it has been great, but we had what we thought was a close call with rent not being paid. However, it turns out the post office returned their rent check as undeliverable even though they had everything right on the envelope.

I know because they sent the original envelope back in a new envelope. I’m glad I didn’t accuse them of anything, as the rent would have been on time if it wasn’t for the post office!”

Should You Become a Landlord?

Based on my experience and input from friends and family who have gone the landlord route, I have learned that every situation is very different, but I have seen a couple of general rules to follow. 

With both of these rules, treat being a landlord as a business. Don’t let emotions or laziness get in the way of doing things right the first time, signing and enforcing solid landlord contracts, and keeping your properties well-maintained.

If You Own One Property

Becoming a landlord is a hit-and-miss proposition if you only own one property. Depending on the location, market, and your marketing skills, getting someone in your unit that will be profitable may be easier said than done. 

If you are confident in your marketing and management skills or that of a trusted manager, it can be a good route.

However, you might be able to get a better ROI on your dollars going another route than renting, so be sure to run the numbers conservatively on your return on investment from renting it out compared to using the cash for something else.

If You Rent Multiple Properties as a Business

You are in better shape to make a lot of money as a landlord if you have multiple properties you can rent out. 

There are significant benefits to the economies of scale of property ownership when you have multiple units and can get discount pricing on maintenance and property management. Plus, having filled properties can subsidize the vacant ones while you are turning them over.

If you can purchase and be a landlord for multiple properties, this could be a good investment for you to pursue!

The Bottom Line

The landlord dream sounds pretty great. However, you must remember that it is not always easy. You have to put in a lot of time and effort to find the right properties. You are risking a lot on the value of the property and the quality of your renters.

If you are up for the challenge and the risk, becoming a landlord could be a great way to grow your wealth!

Become A Landlord: How To Buy And Manage Properties
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