I want to become Landlord - my story, advice?

Question

Hello to all!

First, Im from Serbia and english is not my first language so sorry for that.

I want to become Landlord in my city.

I have land which has one house that is not finished. Im planing to finish that house for me to live there and work (Im hoping next year to get a job - After I finish my masters).

Now, I was thinking to bulid another house, smaller one just for renting rooms, right next to the one which I already have.

I want to build house that will have like on one flor two rooms, but every rooms would have wc and kichen on its own. And planing to rent only female pupils in middle school or female students.

I need advice, from begining, how to get permit for building, is there a cheep way to build this kind of house, how to start, is it profitable business, how to get information and where,...?

What do you think and what is your advice?

Jon Holdman · Answer

Unfortunately you may well be the only member from Serbia.  And local laws and customs are important in this business.  So, I can only answer from a US perspective.

Here you would first need to look into zoning.  What you're talking about building are studio or one bedroom apartments.  And you're wanting to build a multi unit building.  In most areas in the US you wouldn't even be allowed to build a second single unit building on the same lot, let alone a multi unit.  Some areas, like where I live, zoning allows for duplexes (two unit buildings), but nothing more. Some area are zoned for higher density and something like this might be allowed.  So, that's the first hurdle.

Then, you have to worry about "setbacks".  These are limitations on how close you can build to property lines.

Then you have to come up with a plan and get it approved by the building department.  That's the building permit.

In some areas, including much of the western US, getting water and sewer hookups can be difficult.  These can be expensive or, in some cases, nearly impossible.

While you're doing all of this, you need to figure out if there is a market for the units.  What do they cost to build?  What rents would they get?  Is it even a profitable project?

In the US, you absolutely could not do this:  "rent only female pupils in middle school or female students".  We have "fair housing" laws the prohibit choosing tenants based on a number of factors.  Age and sex being two of them.

All that said, I have no idea what the process is like in Serbia or in your area.  In the US this varies a lot from state to state, city to city and even by neighborhood.    For example, I have a half acre lot, about 2000 square meters.  The city wants this area to be medium density, and would like to see up to 19 units per acre.  So, I could theoretically knock down my house and build 9 or 10 units on this lot.  However, that would require a zoning change.  Even though the city has a plan for higher density, the zoning is still for only two units per lot.  Changing it would require at least two public hearings.  I know, based on previous city meetings on this topic, some of my neighbors would be very strongly opposed.

Aaron Montague · Answer

I have NO idea what Serbian law dictates you have to do/provide for your tenants.  Get a copy of local, provincial/state AND national rental laws.  Read them over and over again.

My take on student renters has always been the same:
1. 12 Month Lease, even if they aren't going to be on campus the entire time
2. Get their parents to co-sign the lease.  This means you can go after the parents for back rent if the student doesn't provide it.
3. Never pay a single utility for them.
4. Give them impressive locks.  I used steel door frames, heavy duty deadbolts and peepholes with a cover.

Ivan Ivancic · Answer

Thank you very much for reply! Im in Serbia.

Jon Holdman · Answer

Are you in the US or Serbia?

Ivan Ivancic · Answer

Only to add, ho wdo you do background check on tenant? How much is deposid usually? And, Im thinking to rent that small house when I build it but dont want to be registered as landlord, to pay taxes on that and so on... im guessing thats is illegal, but I guess again that that is the only good and cheap way to deal with tenant if there is problem. If i register as land lord than I have to register that tenent to and there can be a big problems? Im i wright? Can anyone help me realise?