Post from MilitaryByOwner
Are you thinking about becoming a military landlord? Good for you! Whether you're diving in intentionally with a plan for success mapped out or it's the default for your home not selling, life as a landlord has an incredible opportunity for reward. But it's not without its challenges, as you probably already know.
So, let's dive into looking at ways to make landlord life a success -- no matter the path that brought you here.
How to Set Yourself Up for Success as a Military Landlord
Why become a landlord?
If you're not already a landlord, you might be wondering, Why mess with it? Is life as a real estate investor worth the hassle? Only you can answer that question. Some variables make it a complete success for some and a mixed experience for others. Here are a few factors that make real estate investing enticing for your fellow service members.
Passive income. A second income can be hard to come by for active duty servicemembers. So, many take to passive income--money you earn that takes little effort to maintain daily. Real estate is a prime example.
Equity. Everyone hopes to walk away from a home sale with more money than they put into it, right? The longer you hold onto a home, the higher percentage of it you'll own, and the less you'll owe (assuming you make regular payments). Couple that with a favorable market, and you may find yourself with your biggest pay day when you decide to sell.
You might live there again. There's always a chance that you'll return to a duty station again in the future. If this is a possibility for you, it might be nice to skip the house hunt when you return and settle right back into a place you've already called home.
Trust the Process
Life as a landlord, especially from the outside, can look overwhelming and a bit chaotic. It is sometimes, but there's often a method to the madness. One of the ways to prepare yourself is to get familiar with the process -- the logistics.
Understand the legalities. Concepts like the Fair Housing Act, Servicemembers Civil Relief Act, the military clause, and rental laws specific to your state need to be at the forefront of your mind. They'll not only help you conduct business successfully, but also help protect you from potential lawsuits.
Screen tenants. Tenants are the ones you're trusting your home with. You're choosing a person or family to care for your home as you would, respect the rules, and pay rent on time. Finding a tenant can be a little nerve-wracking. If your home is near a military installation, advertise to the military community. Maybe ask a trusted friend for recommendations!
Hire a property manager or tag a friend. If you're PCSing across the country (or farther), you'll need someone close by who can respond to your tenant's needs, make repairs, or perform regular maintenance. A property manager can be a great asset; friends also can prove helpful.
Prepare and organize your finances. Establish an emergency fund to cover rental property expenses like the cost of repairs and maintenance. Then, create a tracking system that keeps all of your rental property expenses and income separate from your personal finances.
Switch to rental property insurance. Rental property insurance is different from homeowners insurance and will help protect you should something happen to the property while tenant-occupied or if a tenant were to get hurt while living on the premises.
Tips for Military Landlord Success
No one expects you to jump into landlord life and know exactly what to do. It takes time to get acclimated and learn the ropes. To get you started, here are a few tips:
Identify your goal. Do you plan to be a landlord indefinitely to bring in passive income? Do you want to hang on to the property long enough for the market to rise? Do you want it to make you x number of dollars before you sell?
Drop the emotions and treat it as a business. It's hard to leave emotions out when you're talking about your home -- the place you and your family made memories. But once it becomes a rental property, it becomes a business. And the sooner you can treat it objectively, the easier it will be to make appropriate decisions when it comes to finding tenants and maintaining the property.
Keep communication open. The best thing you can do is to establish healthy communication lines with your tenants. They should always be able to reach you or your property manager should they need something.
Establish clear lines of accountability. In your lease should be details of responsibilities. Who pays for what? Who's responsible for repairs? Who's in charge of maintenance? It's always a good idea to check your state-specific laws before putting it in writing.
Conduct regular inspections. Regular inspections (by either you or your property manager) can range from a thorough walk-through to a quick drive-by to check on the home. Setting eyes on the property will help you gauge whether or not your tenants are caring for the home as intended.
While life as a military landlord might be new and overwhelming, you're not without resources. Head to MilitaryByOwner to find ample topics on our resource page and blog to help guide you through your new journey.
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