So You Want to be a Landlord? Pick a niche....

By
Real Estate Agent with The Hogan Group at Keller Williams Realty

So you want to be a landlord?

Are you sure?

 

Are you ready to chase down tenants that don't pay?

 

Are you ready for calls to fix toilets at 8am on a Saturday morning?

 

Are you ready to pay your mortgage payments even if you're not getting rent?

 

If I haven't scared you off from your dream of being a landlord...keep reading. If I have.... thank me now because there are alot of expensive lessons that can be learned along the way. I just did you a favor.

In this new series...I'll go through the steps of becoming a landlord. From picking a niche to analyzing the numbers to property management. In this first step...I'm going to discuss why it's important to pick a niche.

 

Big Fish in a Little Pond

The old saying..."I'd rather be a big fish in a little pond, rather than a little fish in a big pond" has a lot of meaning in the real estate investing world. Investors need focus. Chances are if you want to be a landlord it's because you want the long term financial independence that cash flow real estate gives you. To achieve that goal...you have to be focused...focused squarely on achieving that goal.

In order to maintain focus investors need to pick a niche. The niche can be a neighborhood to specialize in, it can be a type of property(apartments, single family, strip malls, vacation homes), it can socio-economic (low-end, student, executive)...whereever your interest lies in where you should focus.

Pick a Neighborhood

Specializing in a particular neighborhood has very distinct advantages. After buying a successfully renting several homes...you'll gain a good reputation throughout your neighborhood as a good landlord who takes care of his tenants and properties. People talk... that talk can help you keep your properties filled even when other landlords are having problems.

Another advantage of picking a neighborhood is knowing what to expect from a home before you even walk into it. One of the hardest parts of picking a potential investment is determining what repairs need to be made(we'll get into this in a later post). Once you buy several homes in a neighborhood- you'll get a "feel" for the homes and what problems they typically have...even before you step foot in the home.

Types of Property

There are as many types of potential rental property types as there are investors looking for them. Some investors only buy duplexes, some only quadraplexes, some only large apartments, some only do small commercial, some do vacation homes at the beach- others vacation homes in the mountains. Literally...there are thousands of variations. Pick what interests you. I had a client that only invested in time shares at PGA Tour stops. That was his interest...and he loved it.

Socio-what?

Many investors only want to deal with Student housing. Student housing can be lucrative as parents typically pay the rent. However students many times are very tough on properties.

Section 8 properties can also be lucrative. The government pays the rent on the first of the month...every month. There is an initial inspection to make sure the property is safe for the tenant. Then there is a yearly inspection to verify the landlord is keeping the property in good repair. If you're a good landlord...and you keep your properties in good shape... these inspections should be no problem

Executive housing is great if you have the means to invest in upscale housing. Executive housing is typically kept in great condition by the tenant. Many times- the rent is paid by the company that employs the executive. Be prepared to furnish the home with upscale quality furnishings. Also- expect to accept short term rentals...three is six month leases is common.

The important first step in becoming a landlord...is finding ther property type that interests you. If this is going to be a part of your long term strategy... you have to enjoy what you do.

Next up... Analyzing Potential Properties...

 


Posted by

Mike Hogan

Associate Broker

RE/MAX Commonwealth

(804)503-0811

RVARealtor1@gmail.com

____________________________________________________________________________________


 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Charles Stallions 10/09/2009 12:44 PM
Topic:
ActiveRain Community
Location:
Virginia
Groups:
Investors
VIRGINIA
Property Management
Landlord Issues
Realtors in Central Virginia and Richmond Association of Realtors
Tags:
mike hogan
pioneer realty
richmond va rental property
richmond va investments
richmond va investment realtor

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Rainer
179,626
Erik Hitzelberger
RE/MAX Alliance - Louisville REALTOR-Luxury Homes - Louisville, KY
Louisville - Middletown Real Estate

Mike - This post is packed with good info.  I'm really looking forward to the rest of your series.  BTW, I got the 'broken toilet' call around 9a on New Year's Day! Great fun. 

Aug 14, 2009 03:31 PM #1
Rainmaker
126,639
Mike Hogan
The Hogan Group at Keller Williams Realty - Mechanicsville, VA
MBA

Yea how fun are those!!  Either get a good property manager or a good handyman..it makes likfe a lot easier. I used to get those calls too...

Aug 14, 2009 03:33 PM #2
Rainmaker
462,474
Richard T. Dolbeare
KW Island Living - Lihue, HI
R(B), ABR, CRS...Hawaii Multi-Island Specialist

I've been a landlord for 10 years or 25 years if vacaton rentals are included.  There have been moments but nothing as scary as some of the reports one hears.  I say go for it!

 

Aug 14, 2009 03:40 PM #3
Rainer
104,422
Michael I. Pulskamp
Mainstreet Brokers - Jackson, CA
REALTOR, EcoBroker, GREEN Desingnee

Mike, Great ideas here, Have you listened to "Get Real R.E.I." The podcasts (free on i-tunes) are great listening with lots of info and not too much in the way of sales, the hosts interview all sorts or gurus. Lots of good investor tips from Tax lean paper to re-habbing whole tracts with help from non-profits and HUD.

Aug 14, 2009 04:26 PM #4
Rainmaker
1,078,682
Mary Yonkers
Alan Kells School of Real Estate/Howard Hanna Real Estate - Erie, PA
Erie/PA Real Estate Instructor

Mike--if we were younger I would be an active landlord.  Now I prefer to be the investor.  Good ideas that I plan to pass on.  Thanks.

Aug 14, 2009 10:21 PM #5
Rainmaker
126,639
Mike Hogan
The Hogan Group at Keller Williams Realty - Mechanicsville, VA
MBA

Richard- I've had some interesting moments over the last 10 years. Once had a moving out bonfire in the middle of a living room with hardwoods. That was nice...

Michael- I havent seen that yet but will surely check it out

Karen- I do both. Im active in my close properties but I stay out of the way in my out-of-town props.

Aug 15, 2009 12:48 AM #6
Rainer
232,170
Diane Rice
Diane Rice, Rice Prprty Mgmnt & Rlty, LLC, South Holland, IL - South Holland, IL
SFR, SRES, CNC

This is being featured under the Property Management Group - thanks for posting it there!

Diane Rice

Aug 19, 2009 02:53 AM #7
Rainmaker
126,639
Mike Hogan
The Hogan Group at Keller Williams Realty - Mechanicsville, VA
MBA

Diane- thanks for the feature!

Aug 19, 2009 03:56 AM #8
Rainmaker
1,171,461
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

I stress for my investor/clients to diversify....in our area, we are fortunate to have many desirable areas so that owners who have refinanced and bought additional property have not bought in the same subdivision; however, they are in the same Central VA area with different features and desirability factors * closet to UVa/NGIC * schools, etc.

 

Aug 20, 2009 04:45 AM #9
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Rainmaker
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Mike Hogan

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