Q:

How do you become a landlord?

A:

Quick Answer

A person can become a landlord by purchasing a property and renting it out. When choosing a potential rental property, price, location and the overall market atmosphere all require consideration.

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Full Answer

The location of the rental property is one of the first things that needs consideration. A property in a safe neighborhood that is close to shopping, school and other amenities rents faster than properties in less desirable areas. If the property is already a rental, check the rental history of the property to determine if rents are paid on time or there are problematic tenants.

A potential landlord must also consider how hands-on he wants to be with the property. A person who doesn't mind doing renovation work can find a great deal on a property. Others might prefer to hire someone to do the work and manage the property. These choices affect the price of the property, which in turn determines how much rent is charged.

Once you locate the right property, consider a cash purchase. If you finance the property, a 20 percent down payment is the norm since investment properties are not eligible for mortgage insurance. Also, if purchasing an apartment building, a 25 percent down payment is normal, as is a higher credit score. There are also additional fees, as well as proof of required cash reserves. Purchasing the property with cash eliminates a lot of the red tape.

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