Tips on Buying and Renting a Home for Extra Income

Tips on buying and renting a home for extra income, being a landlord
Although the housing market is showing signs of recovery, demand for rental housing is expected to remain strong. Follow these tips from rental experts on becoming a landlord or investor in rental property.

Making sense of the story
Understand what it means to be a landlord. If tenants are paying the rent, rentals can be a strong source of income; however, if they’re not, landlords must be prepared to cover costs.
Buy in an area with a history of strong rental demand: Neighborhoods near universities are a good option. For homes in residential areas, proximity to schools can be a good draw for families.
Consider using a management firm: Landlords should determine whether they want to select the tenant and handle property issues or hire a company to do it. Property management firms can charge a percentage of the rent, sometimes 10 percent or more.
Do the math: Although prevailing rental prices will go a long way toward determining what can be charged, getting the best return on an investment starts with making sure the rent is enough, ideally, to cover expenses and costs.
Screen tenants thoroughly: Once the rental starts drawing inquiries, it pays off to screen prospective tenants by asking for previous landlord references and running a credit and criminal records check.
Get familiar with landlord laws: Two good resources for rental rules are the U.S. Dept. of Housing and Urban Development’s website (www.hud.gov), and The Landlord Protection Agency (www.thelpa.com), which includes state-specific rental guidelines and standardized forms for rental agreements.