The Complete Guide to Becoming a Landlord
One of the biggest shifts in the housing market since the financial crisis has been the growth of the single-family rental market. Single-family rentals are developing faster than any other segment of the housing market, outpacing both single-family home purchases and apartment-style living, according to Washington, D.C.-based think tank Urban Institute. While the number of households in the U.S. continually increases, almost all the housing demand in recent years has been filled by rental units.
Changing demographics and housing-market conditions are expected to continue driving the rental growth in the coming years. Young people are waiting longer to get married and start families. At the same time, student-loan debt, lower earnings and tight lending practices have created barriers to homeownership – all of which can make renting more practical. In addition, many people simply prefer renting over buying because it can offer more flexibility, less maintenance and less commitment.
These factors create an excellent opportunity for real estate investors – and not just the big players. Institutional investors account for only a tiny segment of the single-family rental market: Of the 15+ million single-family rental units in the U.S., only about 200,000 are owned by institutional investors. It’s estimated that 45% of single-family rentals are owned by investors who own only one unit, and 87% of investors own 10 or fewer units.
If you’re interested in investing in real estate, the single-family rental market might be a good option. As the owner of a rental property, you’d be a landlord. Being a landlord can be a profitable venture that provides a steady income stream while your property (ideally) appreciates in value. You might also be able to enjoy certain tax advantages while you build equity in the home.
Because of the time and money involved in purchasing, maintaining and renting property, the decision to become a landlord should be exercised with caution. This guide covers the most important aspects of becoming a landlord, including compliance issues, landlord responsibilities, finding reliable tenants and hiring a qualified property manager to help you run your rental property business.Becoming a Landlord: Understanding the Job