Buying an Investment Property and Being a Landlord
So you are thinking about buying your first Sarasota Real Estate property as an investment and become a residential landlord. You are about to embark on an interesting, rewarding and challenging investment. Have you decided on what kind of property you want to own? If you are looking for Siesta Key Real Estate, you can find anything from a small bungalow, to a high-rise, beachfront Siesta Key Condo. If vacation rentals are not what you are looking for, you can find great deals on Lakewood Ranch Homes for Sale right now. These would be geared more towards the long term tenants then the short vacation rentals. Once you have found your perfect investment property, here's what you should be thinking about as you get ready for the closing and being a landlord:
What you Need to Do Before the Closing
First, you need to have a good power team to help you with the closing. This starts with one of our knowlegable Realtors at Key Solutions. They will be able to refer to you everyone else you need to help you with the closing. You need to have a good insurance agent for the property insurance. You also need a good attorney to supervise the closing and make sure the title is clean and “all the I’s are dotted and the T’s are crossed” legally.
Thirdly, you need to have a good home inspector. First, your contract for sale needs to be contingent on a satisfactory home inspection. The home
inspector can tell you everything that will need to be fixed in the next few years so you are ahead of things when the tenant comes to you for these repairs. Let the buyer aware. Depending on your contract, you can approach the seller to get those repairs done prior to closing. If you are the one responsible for the repairs or the upgrades, you know what you need to do and can get an estimate as to how much it will cost you. In addition, you may also need to hire a cleaner to make sure the house is nice and clean and ready for a new tenant to move into if the old tenant is not staying at the house.
If you are buying an investment property for the first time, it might be a good idea to buy a property with a good paying tenant already in place. In this case, you’ll get a security deposit and pro-rated rent at closing that will be listed on the HUD-1 Settlement Statement. You probably will not have to go in and fix a bunch of items. In this situation, ask the tenant and the landlord for a document verifying the rent and the security deposit and that everything is up to date.
Door locks: Unless you are buying a property with a tenant in place, of course, you should change the locks as soon as you take possession. Kwikset’s SmartKey system allows you to re-key the door knobs in place every time a new tenant arrives and is priced similar to normal door locks/knobs.
If you need to get your own tenant, you will want to get with your real estate agent or attorney to get lease documents. Most states have “cookie cutter”, “cut and paste” forms, but you want to get help putting in the extra items like pet deposits, limit of occupancy persons, the particulars of your lease, etc. You must also do your due diligence with a tenant; get their Social Security number and references and run a background check, financial and criminal. Make the prospective tenant pay for the search which is usually $25-50. Get a good security deposit up front which is usually one month’s rent. If you are not sure about a tenant, get the first and last month’s rent up front and make them pay this by money order or certified funds.
Finding a tenant
If your real estate agent cannot find a tenant for you, post your rental listings for free on Zillow, and if you join the Zillow Rental Network, you’ll get access to a suite of free tools including online rental applications and Craigslist AdHelper.
Talk to your real estate agent and make sure that you are asking for the right rent. If you ask too high, you will waste time since no one will respond to you. If you are too low, you have cost yourself money. Talk to prospective tenants on the phone and do your due diligence (background checks) before you show the property to the tenant. This will save time for you and them. Once you agree on the terms with the landlord, get the lease signed quickly so they can start paying and you can move in. Always follow the Golden Rule and treat your tenants professionally
If you need any managing your Sarasota Real Estate investment, Our Sarasota Property Management team can help you with everything from finding a tenant, to making repairs on the property.