Financial Considerations For Aspiring Landlords

Q. What is one of the most important things I need to know before getting into the landlord business?

A. Know your financial goals and time line. The kind of property you might invest in will depend upon many factors but time is a big one. For example, if you are making an investment for 30 years or so, then you can take on a property that may require more time and money into it over time. On the other hand, if you are looking to make money in the short run, you will definitely need to make a different kind of purchase.

Q. Is getting a loan for a rental property any different from the loan I got when I bought my own home?

A. Yes, very different! Lenders regard the purchase of an investment property as risky business and will ask for substantially larger down payments, charge higher interest rates, and will want to see that you have substantial cash reserves for tending to your new property.

Q. I’m interested in getting into business as a landlord but don’t know where to begin. Is there someone I should be talking to?

A. Lots of people. When you start your search it’s a really good idea to develop a network of people you can turn to for information and advice. A good place to start might be a local realtor who specializes in income properties. There are also landlord associations that can be very helpful. Also, think about resources in community based on how that community does business. Talk to people at your local bank, tell them what you are up to. Clerks in city hall often know a lot about what’s happening locally. Look in the papers for foreclosure notices too. You can even approach other landlords directly. Maybe one of them is ready to sell. People can be very generous with information. When you find one of those, be grateful and return the favor. You are developing a business grapevine for yourself, talk to everyone and hand out your business card like it was candy.