Do you envision yourself sitting back and collecting monthly rent from your tenants? For the majority of home renters, coming out of rent cycles into homeownership and eventually renting a home, as a landlord, seems to be another episode of mission impossible.
However, did you ever pause to think that you could rent a house and become a landlord within an unbelievably shorter time? In this post, I outline some important tips to help you come from being a tenant to homeownership and eventually venture into home rentals business.
1. Smart Financial Planning
The question of how soon you can become a landlord depends on how well you plan your finances. No matter how small your income might appear, your potential is limitless. Here are some important tips to help you make smart financial plans geared toward becoming a landlord.
- Find out how you spend the current earnings
- Set long term financial goals
- Prepare for unexpected with insurance cover
- Keep an eye on your credit
- Open a savings account
- Keep track of your financial goals
The tips shared above will help you to come up with proper financial planning while making sure you spend your money only on things that matter.
2. Focus on Building a Strong Credit Score
The journey to homeownership can be tough without working with a mortgage lender. The truth is that a majority of mortgage lenders will require a minimum credit score to lend you money that can start a good home rentals business.
The journey to a strong and solid credit score should start early enough. It is unfortunate that a majority of people want to wait until it is time to apply for a home mortgage, to start working on their credit score. A clean credit score is a huge step to starting home rentals business today. Here are some important tips to help you build a credit score quickly.
- Make sure you have settled outstanding bills on time
- Limit requests for new credit
- Keep the old accounts open and deal with delinquencies
- Review your credit score on a regular basis
A good credit score means you are eligible to borrow a mortgage anytime you are ready to start your home rentals business. Moreover, a high credit score lets you negotiate for cheaper mortgages.
3. Focus on finding the Best Mortgage Lenders in your Area
Now that you have a positive credit score, the next item in our tips is researching the different mortgage lenders. The objective is to find what mortgages they are offering and at what rates. A common mistake, especially among first-time mortgage lenders, is sticking just to one mortgage lender just because you are banking with the same bank. The reality is that the other mortgage lenders out there could provide cheaper mortgages and more convenient mortgage terms. In that regard, take time to find out the best mortgage lenders near you.
4. What are the Different Mortgage Options
What mortgage options can you apply under? There are different first-time homebuyer programs available within the mortgage market today. Examples include:
- VA home loan
- FHA mortgage
- USDA home loan
- Conventional home loan
The home mortgage options come with different requirements. Find out which home buying program best suits your current requirements, and research whether the mortgage lenders provide financing under the particular home mortgage option.
5. Make Sure You Borrow Only What You Can afford To Repay
Mortgage lenders will pre-approve you for amounts that you may not need. Some first-time homebuyers have fallen victim to mortgages they cannot afford to repay. It is always advisable that you borrow a home mortgage that you can afford to repay. Borrowing an amount that you struggle to repay could end up getting you into trouble with the mortgage lenders and the property listed for repossession.
6. Work with a Reliable Real Estate Agent
Real estate agents play an advisory role when it comes to purchasing a home and even building home rentals. In that regard, it is always advisable that you work with a reliable agent who will advise you on the best places to purchase or build a rental unit. in addition, the real estate agents will advise the client on the best types of home rentals to consider. Do not hesitate to seek the guidance of real estate agents when finding a mortgage lender near you.
7. Know the Laws
The home rentals business has guiding rules and regulations that must be adhered to. The home rentals regulations are put in place to make sure there is proper guidance on how tenants and their landlords relate. New landlords need to read and understand the prevailing regulations.
Are you ready to jump out of the current rent cycles into the home rentals business? All that it takes is proper financial discipline and working with reliable mortgage lenders. Come up with a financial plan and work on a credit score. Do not overlook the importance of researching different mortgage lenders to find out their rates and the rules that apply.
