A coworker expects to inherit a two-bedroom house in the next few years and asked for some advice on getting started as a landlord.
It’s a surprisingly simple formula, really.
Do some homework. Look to see what comparable houses in the same school district rent for. Check Craigslist or Hotpads.com to get an idea. Keep an eye on how long the ads run too–if an ad runs more than a few weeks, you probably don’t have a prime comparable. I decided to get into rentals when I saw houses in my school district stay on the market for days before the signs went down, and I saw that the dollars were realistic.
If the prices are too low, don’t get into it. You have to decide what’s too low, but if you can’t rent the house for 1% of what you put into it, dollar wise, you won’t make your money back. If you put $100,000 into a house, you’ll need to be able to rent it out for $1,000 a month.
Paint the walls a dark beige. It’s inviting and feels secure, and it’s easy to take care of. Use eggshell or semigloss paint to ease cleanup.
Replace outdated flooring. No shag carpet. Put down a good quality laminate floor in anything that isn’t a kitchen or bathroom. It’s inexpensive, durable, and easy to replace again when the time comes. Be honest when people ask, but many people can’t tell the difference between laminate and hardwood. In kitchens and bathrooms, vinyl planks aren’t a bad option. They’re easier to put down than squares, though squares are very cost effective.
Replace appliances. They don’t have to be brand new, but tenants expect them to be clean and to work. And measure all of your doorways and the height from floor to cabinet on both sides before wrangling a side-by-side fridge into the house. I once dealt with a kitchen that was designed for one, but the rest of the house wasn’t, and the floor wasn’t level. Also, if you want top dollar, install a dishwasher and a garbage disposal. And while basic white appliances won’t win any design awards, you can keep touching up the dings and they’ll still look good enough in 10 years. You’re not trying to win awards; you’re trying to keep renters happy while keeping your profit margin workable.
Replace broken-up trim, or paint it white. Good woodwork adds tons of character to a home. But the cheapest, easiest fix for beat-up woodwork is putty and white paint. The nice thing about beige is that it looks good with either white trim or stained wood.
Like I said, this is formulaic, but it’s a time-tested formula that’s been working for decades.