Being a successful landlord means more than collecting rent from your tenants. Sure, rental income is your primary source of cash flow. But making a healthy profit as a landlord requires managing properties and tenants properly. Even the way you collect rent from tenants can affect how profitable your business is.
Of course, many startup landlords hope to start earning passive income. However, to get to that stage requires a lot of work and organization. The best way to know how to run a lucrative landlord business is to learn from those who do it well.
Profitable landlords are on top of everything, from maintenance to late payment fees. To make sure you become a profitable landlord, it’s worth avoiding typical rookie mistakes and paying close attention to the following list.
Top 8 Secrets of Profitable Landlords
1. Profitable landlords know their numbers
It’s not enough to calculate a mortgage, add on the profit you want, and rent out a property for that amount. There are a ton of other numbers you must consider.
Here are just a few:
Maintenance and repairs
Vacancy rate (approximately 8% of the rent)
You may also want to consider a property manager, particularly if you have to manage many rental units. However, for startups, the cost of a property manager usually makes it an unviable investment.
Profitable landlords are always realistic, even though they always consider the worst-case scenario to ensure they have the cash flow available.
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