Whether you own a condo, a single-family home, or a multi-family complex, if you are renting your property out to tenants, you are a business owner. Use of your property is your product, and tenants are your customers. Just like with any other company, the financial success of your venture as a landlord depends on proper management and the ability to attract and keep customers.
Many people become inadvertent landlords when they need to start renting out their own residence due to a change in jobs or family circumstances. Others set out to purchase an income property as a financial safety net or even a primary income stream. Whatever your reason for becoming a landlord, why not generate the most income possible?
A detailed business plan including information on your property, the local real estate market, and the marketing strategies you will employ to reach out to new tenants is the perfect tool to help you grow your property, your “business.” A plan with comprehensive financial projections will not only help you budget properly, but it will increase the likelihood that you receive an investment or bank loan to help purchase your property.
Having tenants always involves a certain level of risk. Accidents of any kind, even those due to tenant negligence, can implicate you legally. Furthermore, the industry tightly regulates the actions landlords can take, sometimes even down to the words they can and cannot say. For this reason, it is imperative that you seek out professional help in designing your leases and any applicable contracts. An expert in real estate law will also be able to answer any questions you have about incorporating your property. By establishing your property as a separate legal entity from yourself, you can greatly reduce the risk to your own assets in the case of any financial or legal problems.
While you are not required as a landlord to take many of the actions discussed above, they certainly reduce your legal and financial risks. They can also greatly improve your long-term returns. Who knows—you may find that you are such an adept CEO, your can expand your company into new properties and higher revenues.
