More people are renting homes - and at higher rates - than ever before.
That’s according to an article published in the New York Times last year, and it continues to be true. While there are many reasons for this trend, one thing seems clear - it’s a great time to be landlord.
Or is it?
Before you buy a second property and start collecting rent, there are a few questions to help you decide if landlord is something you should add to your resume.
Is the rental market strong?
Not all cities are created equal and some places have more renters than others. If you live in coastal North Carolina, however, you’re in luck. Wilmington in particular has a strong rental market, thanks to our colleges, our desirable location and the fact that the Port City is growing. Due to these factors, our rental market is fairly competitive and you should have no trouble finding tenants for your empty home.
Do you have time and energy for a second job?
Being a landlord isn’t a hobby; it’s a business and should be treated as such. The question is whether you have the time to do it well. In addition to finding and vetting tenants, you’ll have to collect rent, make repairs and troubleshoot issues. Ask yourself whether it would be better to do these things yourself or outsource the day-to-day tasks to a management company, such as Network Real Estate. Our Homeowner’s Association Management Division offers detailed management services and can be trusted to mind and manage your property, making it much easier to be a landlord, especially if you already work full time.
Can you find a good deal on a second home?
Before you can rent a second property, you have to buy one. And to improve your odds of coming out ahead, it’s important to find a good deal on a desirable house in a good location. Remember, you want to attract good tenants and the way to do that is with a good house.
Consider where the home is located, the number of bathrooms and whether it could be split with roommates. Think also about the rental market in Wilmington and whether you’re hoping to appeal to college students or young families. This will help guide your choices.
Network Real Estate has a database full of great homes for sale in Wilmington and the surrounding area. Browse it today and let us know what catches you eye.
Can you cover upfront and ongoing costs?
Investor properties aren’t eligible for mortgage insurance, so you’ll have to have at least 20 percent for a down payment. For multifamily properties, that minimum jumps to 25 percent. You’ll also need a higher credit score, along with cash to cover a number of mortgage payments, property taxes and new appliances when the current ones need to be replaced. While your tenants’ rent will cover some of this, you need to be prepared for the worst case scenario, such as a tenant who gets evicted or a roof that needs to be replaced ASAP. Owning a rental property is a good investment in the long run but the initial costs are high. The better you are at covering them, the more lucrative your career as a landlord will be.
Can you put in the work to find good tenants?
The key to a good landlord experience is good tenants. Do a credit and criminal background check on anyone you’re considering as a renter. Avoid doing business with friends and family - it’s best to keep things professional. You should also work with a real estate agent and attorney to ensure that your lease is fair, legal and protects you and your property.
If you answered yes to these questions, then becoming a landlord might be a good fit for your lifestyle, and a lucrative decision. Contact our offices today to learn more about the opportunities of owning a rental property, how to find a great deal and how Network Real Estate can help you manage your property - and your money.
Neal Johnson is a CMCA, CRB, CNE and GRI-certified, licensed real estate broker at Network Real Estate, which has exclusively served a high volume of property sales and purchases in the greater Wilmington area for more than 30 years. With three offices at College Road, historic downtown Wilmington and Pleasure Island, Network’s brokers are widespread and well-versed in this marketplace, making Network a preferred real estate company for first-time homebuyers and beyond.
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