Buying a Multi-Family Property? Your are a Business Owner
Wednesday, September 24th, 2008Yes, if you are planning on buying a multi-unit dwelling and renting out one or more apartments (or the entire property), then you will be a business owner.
Why do I say that? Well, the definition of a “business” according to Dictionary.com “is a person, partnership, or corporation engaged in commerce, manufacturing, or a service; a profit-seeking enterprise or concern”. If you own a property and intend on renting all or part of it for a profit (or to be able to make your mortgage payments), then you are providing a service to your tenants for the purpose of making money. Or in other words, you’re in business!
Well, you might me be asking yourself, “What does it matter?” Well, it matters a great deal. If you want to be a successful landlord then you need treat it like a business. What are some of the things you need to know to operate a successful Residential Property Rental Business. Here is a list of just a few:
-How do you find good tenants?
-What do you do if a tenant doesn’t pay his rent?
-How many payments can a tenant miss before you can evict?
-Do you pay taxes on the money you collect from your tenants?
-What services are you legally obligated to provide for your tenants?
-What are the landlord tenant laws in Brooklyn?
-Who is responsible for repairs?
These are just a few questions that anyone who wants to rent out residential property should know the answer to. Unfortunately, I’ve seen many people buy multifamily houses without ever giving serious thought about the difficulties that can come when you have to deal with rental tenants, and that’s a big mistake.
Owning rental property is a great way to generate income now, and build up equity for the future, however it comes with many challenges. Make sure you are up to them by doing your homework before you take the plunge. After all, you’re going to be a business owner, and you don’t want your business to fail.
To get you started, here’s a website, Mr Landlord.com that is chock full of useful information for landlords and landlords to be.
Typically, it covers any liabilities that occur in the common areas of the co-op. For example, if some one slips in the hallway outside your apartment, the co-op’s insurance policy would cover any bodily injury that occurs. However, if that same person slips and falls in your unit, the co-ops insurance does not cover any liability, you would be responsible.