Is Selling A House Better Than Being A Landlord In Denver?

Posted on: September 22nd, 2016 by Adam, No Comments

So you want to be an expert at being a landlord? It can be very lucrative if you know property management.

Being a landlord is a very fun thing if you know what you’re doing. First time home buyers are a declining bunch. That percentage continues to shrink, even as millennials continue to show more interest in becoming buyers (eventually after 2018). If you’re already a homeowner, managing your own residence may be enough, on the wallet and the elbow grease. If people aren’t buying starter homes, then the rental market has to be big business, right? Before you let your Realtor convince you in buying in a hot seller’s market, you may want to sharpen your pencil and do some research on what it takes to do some landlord.

Here are the top 5 mistakes most being a landlord newbies make when getting into the rental business. In no particular order.

1. Being A Landlord Is Long-Term

Please do not think this is going to set you up for retirement after 1 year. You may be able to buy quite a few properties in one year but that doesn’t mean you can sustain them afterward. Retention is going to be a word on your mind heavily during this process. Remember, there’s “good debt and bad debt” and as soon as your properties go vacant it’s going to be costly. All investments have their risk and you got to stick in there.

2. The Being a Landlord-Tenant Relationship

“Many landlords gloss over housing discrimination laws because they assume that as long as they’re not racist or sexist, they needn’t worry about fair-housing violations,” says Ron Leshnower, real estate attorney and author of Fair Housing Helper for Apartment Professionals. You did not decide to get into the rental business to become an attorney, so hiring one and at least going over what the laws are will help you become a landlord tenants will know, like and trust.

3. Qualifying tenants while being a landlord

If you are or previously have been a store manager and have interviewed potential employees for a business, this will feel very similar to you. Except this time you’re interviewing potential tenants for your business. If you aren’t familiar, don’t worry, this is not as intimidating as it seems. Just one step at a time:

Application
Credit and Background Check
Verifying Income
References

Okay maybe this seemed simpler than it is. It will eventually feel that way though. Brandon Turner, of Bigger Pockets, wrote a fantastic article titled, “Tenant Screening: The Ultimate Guide.” This will help you become a tenant screening pro in no time!

4. Start in your backyard in being a landlord

Being a professional home buyer, I have many friends who are real estate investors (go figure!). Especially since the housing market has gotten so hot in Denver, Colorado since 2011, a lot of investors would try to invest in cheaper markets like Memphis, TN or St. Louis, MO with the hopes of getting 3 time the amount of money. Unfortunately they’ve found out that it’s the same if not more expensive because of how much they had to outsource. They need a reliable crew at all times. You don’t want to hear the stories about them buying in the ghetto either. It’s recommended you do not invest more than 2 hours outside from where you live.

At the same time I do have friends who invest in other markets with great results but they weren’t novice at investing long distance. They’ve already been in a long distance market for 5+ years. They went through the mistakes and had the financial backing to take a loss while being a landlord.

5. Being a landlord requires being near your rentals

Real Estate is absolutely a people business. Typical when buying, selling or renting a property we are trying to solve a problem and fill a need. The house has no emotional attachment to itself. You want to be sure to check on the property regularly for any maintenance issues. Don’t just wait until an emergency happens while being a landlord.

Prevention is better than cure. Yes, you have to give a “Notice of Entry” which in most states landlords must give renters at least 24 hours notice before entering the residence. Don’t be the landlord that takes forever to fix something and end up making your tenants unhappy. Besides repairs to the property you want to make sure rent is collected on time, that your buying in good neighborhoods and you have a good team of people around you in person as you build your rental business.

Still considering being a landlord in Denver, Colorado?

You will not learn everything there is to know about being a landlord from this blog but hopefully it’s a good starting point and has cleared up any fog that may have been in your mind before. Things take time, you must study and then apply that knowledge. Here are some great resources and apps for managing your rentals:

https://www.renticity.com/

http://landlordyapp.com/

https://cozy.co/