A) Location (like your principle residence) is key, as you want the price of your rental to go up so make sure the area is desirable, also if you can afford it look for a duplex or triplex so if one renter leaves you still have income coming in.
B) Borrow as much as possible for the building, follow the Golden Rule (get wealthy by using someone else's money) so you then get the tax benefit of writing off the higher mortgage interest to offset the rent, as that's considered an income. Also this way your keeping
your own money to pay down your own cost of living and putting the extra into other investments. Most banks will ask for 15-20% down payment because they deem it a business, so what i did was lived in
the house for awhile which required a
lower minimum amount as it was considered my principle residence, then moved out and started being a landlord on that particular building
lower minimum amount as it was considered my principle residence, then moved out and started being a landlord on that particular building C) Try to be handy with repairs or have friends who are, as paying a tradesmen for all your issues will make you not want to be in the business. Or i always looked for a tenant who was of that talent and i would reduce the rent for them which was a great situation for both of us, as they took pride in their work and they got paid for it. Then you had no worries with all the little things that would arise and trust me, everything does gets beat up a lot quicker than your own home. On that thought, at first i had to keep telling myself not to be in "love" with the property, as it was an investment and don't be disappointed if your folks didn't keep it just so. For example i went with commercial carpet or laminate hardwood floors, stuff that is durable but it wouldn't be what i would use in my own residence
D) Look for smaller lots as its less to take care off and a deterrent for those big backyard bashes
F) On that note, if you find good tenants do everything possible to keep them by maybe reducing the rent, upgrade the washer/dryer, buy them a vacuum cleaner etc, as all landlords have horror stories, so well worth doing the little things to keep your sanity
G) Finally my experience with management companies that collect rent/screen applicants hasn't been good, they charge 50% first months rent then usually 10% for each month after. Some issues i had is they would never go out to check the property as they had the tenant mailed in the post dates, but this is what you want as a landlord is those 'eyes' to protect your investment by going to your building for a physical walkabout. Also when vetting out references they would call the names on the applications, as it turned out most times it was relatives who gave glowing reviews only to find out to my chagrin it was not so good, plus this process cost you hundreds of extra dollars
My Conclusion
So there is my list of the dos and dont's and i have known some folks that have done very well in the landlord game but i had my taste of it, personally i rather have a piece of paper (stock/mutual fund) that doesn't call me on a weekend night saying the toilet is plugged or Aunt Mabel needs a kidney transplant (true story 😏) and thus the rent money is needed to be by her bedside
Other Financial Disadvantages
A) Maintenance; landlords are responsible for big ticket items like a new roof or HVAC replacements
B) Vacancies; when the tenant moves out the mortgage and property tax is still due, plus turnover cleaning, minor renovations (hopefully) and marketing
C) High Asset; if needing emergency cash, you cannot liquidate a house as quickly as selling off stocks or bonds
D) Delinquent Tenants; even with a careful background checks your "people" can cause severe property damage, leave pest control issues and be owing months of past rent. I lived through all of the above, no fun as its hard to believe humans can be this way
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