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What to do if You’re an Accidental Landlord

November 21, 2019

The Accidental Landlord

When Al and Pat bought a beautiful 3 bedroom townhouse for their graduating daughter, they pictured it as the perfect way to help her launch her life. It was a new build released in 2012 in a very nice neighborhood within a fast growing city. A very smart and timely choice.

Instead, it turned out to be the perfect investment for their own retirement. In the process, Al and Pat became accidental landlords. They rented it out instead.

Given that millions of young buyers are buying homes and need extra income, and because baby boomers are aging and are transferring ownership of properties to their children, there is going to be a boom in accidental landlords in the US, Canada, Germany, UK and Australia.

Plans Well Laid Are Good for Other Reasons

Life often doesn’t go as planned. In fact, experts say real success is an offshoot of your intended goals and journey.

Their daughter was moving to another country and wouldn’t be using the townhouse. Although it was priced around $300k, they knew the economy was picking up and it would be worth more down the road. And down that road, it sold for above $800,000. It was a beautiful townhouse, end unit.

They rented it out for about $1300 a month for over a decade to reliable tenants for total revenue of more than $150,000 during that rental period. Being an investment, it qualified for a variety of tax breaks, which really fattened up the final ROI.

Benefits for the Accidental Landlord

Becoming an accidental landlord was great. They found quality tenants who paid reliably and took good care of the unit. It was the perfect outcome and was very low maintenance landlording. They’re now living in their dream town near Niagara Falls and have purchased a Tesla electric car to run a part time limo service. It was their dream and they’re living it.

Today, prices are very high and aren’t climbing like they were. The greater return for accidental landlords today will come from good planning, efficient management, and good tenant relations.

Renovate and rent: Some investment property owners are partitioning the home into several rentable units for even better returns.

Given the rise of rental prices, it’s more than possible to launch a rental property today and get an excellent return.

People become accidental landlords through inheritance, financial need, and change in personal circumstances. If this is you, and you’ve been given a property or have one, then it’s wise to look ahead at what might be coming, tasks you’ll face, and what dangers are there. A good quality DiY landlord software solution can help.

14 Things to Do If You’re An Accidental Landlord

We’re assuming you have legal possession of the property and don’t need a realtor or lawyer. Here the key 14 tasks you need to manage:

  1.  assess the fitness of your home/rental unit
  2. prepare to hire a contractor to help make the unit rentable and attractive
  3. consider your time/energy/budget to manage it
  4. contact a lawyer if you have a property in a building or home owners association
  5. obtain landlords insurance
  6. choose a simple DIY landlord software to keep things legal and professional
  7. don’t just screen tenants, choose those who will pay reliably and take care of your rental unit
  8. create a legal rental application that fulfills your verification and selection requirements
  9. set the right rent price
  10. if you have a mortgage, carefully out the cash flow you need to pay it and what you’ll need in reserves
  11. work with a real estate tax expert to plan a tax reduction strategy to reduce income tax and capital gains
  12. write your lease carefully
  13. if your property is in another state, consider hiring a property manager
  14. consider whether you might buy more properties after you achieve some success

Millions of people will become accidental landlords in the next 5 years. It’s wise to read up on landlord articles, get a feel for the whole business of renting and property management.

From lease management to maintenance to emergencies and tax management, you can grow the ROI of your property. Accidental doesn’t have to mean full of mistakes.

Check out ManageCasa Landlord Software. Try it out for free and see how it can help manage your property like a pro.

 

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