One of the fastest growing areas of the real estate investing market consists of homeowners who rent their house and become landlords. There are many reasons a homeowner may want to downsize; maybe their overhead is too high or they want to sell but don’t have enough equity. This can work out great for the right person, but being a landlord is not for everyone. If you have never rented before, you will quickly find out that it is a whole new ballgame. You need to be on top of everything from your lease, to your security deposit, to finding a tenant and finally to finding someone that can take care of minor repairs. Renting could be a great move, but it could also blow up in your face if you are not careful.
The most important thing for any new landlord is finding the right tenant. Too many landlords, old and new alike, will rush the tenant screening process and end up with a bad tenant. This has a domino effect on everything else with the lease. The new landlord ends up spending too much time or money trying to compensate for their tenant. Eventually they just want to sell, even at a loss, just to get out of the property.
Conversely, many successful investors have gotten their start this way. Seeing that they can cover their mortgage, get a tax benefit and make a monthly profit renting their house motivates them to look for other opportunities. With their new found cash flow, they save up for another property and soon enough they have a small portfolio.
There is no denying that many homeowners had to adjust their thinking when the market collapsed or on a whim when circumstances change. What initially looks like a negative, having to rent and rent out their home, oftentimes can end up being a positive. If you find yourself in this situation, you are not alone, and it could be your start to a successful real estate investing career.