I have a friend who recently bought a house, which is kind of crazy to me. Going there and seeing his place was like the final shock of adulthood for me; I have friends who are getting married, having kids, and buying houses.
The house he purchased is a side-by-side duplex. He lives in one half, and has tenants in the other. My friend has no experience in being a landlord, so the past few months have been sort of a baptism by fire for him. He’s already learned a great deal about real estate in general from his experience, and when I was there for a visit the other week, we talked about some of the knowledge he’s gained.
Here are a few of the notes that he hit on most often. From everything I read about owning and renting a home, these seem to be right on the money.
- Don’t expect to make a ton of money right away. My friend initially purchased the house as a money-making opportunity through renters, but he quickly discovered that real estate is a long-term investment. It was several months before he actually got a group of renters in the house, and he’s still been focusing on making upgrades around the home. He’s financially back on track now, but he would admit himself that he had some delusions of immediate grandeur.
- You have more responsibility than you think. This friend of mine is still young—like me, he’s in his mid-20s and is more familiar with the easygoing “bachelor pad” lifestyle than being a responsible homeowner. However, being responsible for the whole home and having to ensure that his renters have everything they need has really made him grow up in a hurry.
- There’s always something to be done. Any homeowner can tell you that just when you think your home is perfect, something is bound to happen. It could be that a repair needs to be made, or that you suddenly decide on some aesthetic upgrades. Owning a home is hard work, especially when you have renters in that home who are counting on you to give them the best rental experience possible.
- Don’t try to be friends with your renters. In the end, the landlord-tenant relationship is one founded on business. It’s great to be friendly with your tenants, but you should probably avoid being friends with them because you never know how that could compromise your business. This is something my friend has struggled with in particular, as he’s a naturally outgoing person. However, in the long run, this is quite important.
- Save time for projects of your own. Since my friend’s property is a duplex, a lot of the work he does on it benefits both him and his tenants. However, he tells me that it’s important for him to take the time to do things around the property that are just for him. It helps him to stay motivated for future projects.
If you are smart about when and where you are purchasing a home, real estate can be a sound investment. However, many people are unprepared for life after the purchase as a landlord. Consider these wise tips from my friend before you make your purchase!