Investing in property is a good way to make money and a lot of people are getting into it these days. But if you believe everything you hear you probably believe that it’s easy money and nothing can go wrong as long as you’ve got the cash to buy a property in the first place, but that’s not true. Like any other business owner, landlords can fall on hard times so it’s important that you manage your money well.
If you’re thinking about getting into the property game, here are some tips on cutting costs and managing your money.
Cash In One Of Your Properties
Landlords often run into problems when they expand rapidly and suddenly realize that they don’t have the cash to run all of the houses that they own. If that happens, you should try to cut costs elsewhere but if you’re really struggling to make ends meet, you should think about selling a home to get a bit of a cash injection. You’ll still be making good money out of the rest of your properties but you’ll have more liquid cash to pay for running costs and having one less house means you’ve got fewer problems to deal with as well. If you’ve expanded too quickly, selling one of your properties is the easiest ways to make things more manageable.
Choose Tenants Wisely
One of the biggest problems landlords face is bad tenants who either don’t pay their rent on time or do a lot of damage to the house which you have to pay to fix after they leave. If you sort out your selection process you can avoid these problems most of the time. Whenever a tenant is applying for one of your properties, ask them for a reference from a previous landlord so you can make sure that they’re reliable. You should also ask them for some kind of proof of earnings so you know that they’ve actually got enough money to pay the rent. On top of that, you should ask for at least one month’s rent as a deposit, if not more, to cover any damage that might need fixing after they leave. Avoiding bad tenants is one of the easiest ways to make sure you’re getting your money every month and you aren’t paying out loads in repair costs.
Get Landlords Insurance
Even if you are vetting applicants carefully, there’s always the chance that people could lose their job or one of the tenants could move out, leaving the remaining tenants unable to pay the rent. There is no way that you can foresee these events and as a landlord, you’re likely to encounter a tenant that can’t pay rent at some point. By getting landlord insurance policies that cover some of that rent while the tenants get themselves sorted, you avoid problems with cash flow. Insurance also protects you against things like fire or theft, so you won’t lose your whole investment because of a disaster.
Follow these money management rules and you can make your property investments a lot safer.