So you want to be a landlord? You're not alone. A recent Wall Street Journal article reported that during the first four months of 2005, "investors accounted for nearly 10% of new mortgage loans used to buy homes in the U.S., up from 6% in 2001."

I wanted to be a landlord, too. I gave it some thought a while ago, when I became attracted by the idea of money just rolling in from tenants every month. I then spoke with a bunch of people who have owned rental property for many years, and those conversations opened my eyes quite a bit. Perhaps I'll instead fund my retirement through investing in solid stocks such as Wal-Mart (NYSE:WMT), Motley Fool Stock Advisor recommendation Costco (NASDAQ:COST), Motley Fool Inside Value pick Home Depot (NYSE:HD), and Johnson &Johnson (NYSE:JNJ). They have outstanding track records and plenty of potential to continue rewarding investors. (Of course, not everyone agrees. Tim Beyers is wondering whether to short Wal-Mart.) Some terrific stocks even have their fortunes tied to the home industry -- Home Depot, for example.

Still, the landlord business continues to fascinate me, and I'll keep mulling over it. Here are some recommendations for you, if you're interested in becoming a landlord.

  • First off, buy carefully. Consider the neighborhood and remember that you may well be called there in the middle of the night, to tend to some tenant's emergency. And if you see a lot of "For Sale" or "For Rent" signs in the neighborhood, that suggests that there may not be great demand for housing in the area -- or perhaps there's just an abundant supply. Either way, you may not be able to demand much for rent.

  • Next, anticipate unexpected outlays of money, some of which may be sizable. Overall, landlording can be a satisfying and worthwhile endeavor, but it does come with some experiences that can be real doozies. One landlord I spoke with told the story of how amazed she was when she went one day to collect the rent at a rental property ... until she realized that all of the windows were gone. The tenant had sold them. Despite a trip to court, the landlord ended up having to replace 18 windows and frames and 18 storm windows, at a cost of roughly $4,000.

  • Expect routine cash outlays. Rental properties aren't all about money coming in. You'll probably need to paint apartments (or offices) between tenants and every few years for remaining tenants. Rugs will need to be replaced, locks changed, various repairs and upgrades made. If you want to attract and keep tenants, your property should look clean and decent.

  • Don't expect to raise the rent each year. You could do so, of course, but there are some compelling reasons to not do so, such as the importance of keeping good tenants. If you have a good tenant who takes care of the property and pays on time, you'll want to keep him or her happy. You're probably better off getting a reliable $800 per month instead of a more iffy and troublesome $1,000 per month. You can certainly hike the rate between tenants, and for a tenant who stays many years, occasional increases are reasonable.

  • Expect that you'll need to be demanding. Don't let tenants fall more than two to four weeks behind in the rent, because many who fall behind will never be able to catch up. If there are problems, negotiate. One landlord explained that he switched a tenant to paying weekly instead of monthly, because that was more manageable for the tenant. The same landlord recommended collecting the rent in person because it allows the landlord to check up on the property's condition and make a personal connection with the tenants. (But be careful, too -- you might become a robbery target if you're known to be making the rounds at the same time each month, collecting cash. Perhaps you shouldn't go alone.)

  • Learn the rules and the laws governing rental properties (such as the Fair Housing Act) so that you know how to deal with various issues, such as the screening of applicants. One landlord recommended preparing a summary sheet for each new tenant, listing your responsibilities and the tenant's. That can prove useful later on, if things end badly and you end up in court. You'll need to know things like when and how to evict, and when you can and can't lock someone out of the property. You'll also want to make sure you understand your insurance policy and what it does and doesn't cover.

  • Seek out and develop relationships with people who can help you, such as friendly, experienced landlords in the area. They can be terrific resources when you need to know how to deal with situations.

  • Expect to put your handiness to use or to become a little handy, if you're not so. You can save a lot of money by doing simple things like painting an apartment yourself. Learning a few lock and plumbing tricks can help, too. It's also critical to find good professional service people (carpenters, electricians, plumbers, contractors, roofers) and to develop strong relationships with them, since you'll need them to bail you out when a boiler stops working on a cold night or a toilet breaks. Treat these folks well.

  • Expect some tenants to be jerks. The landlords I spoke with estimated that in their long experience, roughly 3% to 10% of their tenants have caused a lot of trouble. It might seem an easy enough problem to deal with, but remember that the problems are not always evenly spaced out. You might go several years with few or no problems and then run into a string of terrible tenants for several years.

  • Assess your personality to see whether you have what it takes. I was advised that you need a strong constitution. (You'll probably see some gruesome messes, among other things, as a landlord, and you'll likely have to clean some of them up.) You shouldn't let people walk all over you, because some will try to do that. You also need to be fair and even-tempered, and to be able to read people. Some folks will have real problems that interfere with their ability to pay you, but you may be able to work things out. Other times, it will be hard, but you'll need to evict them.

  • Be careful checking references. One landlord suggests calling not just the last landlord (which might also be the current landlord, eager to get rid of these tenants), but the previous one or two as well. Those folks will have no reason to not be honest.

  • Learn more. One useful book on the topic is The Complete Idiot's Guide to Being a Smart Landlord, by Brian F. Edwards, Casey Edwards, and Susannah Craig. Others are Landlording: A Handymanual for Scrupulous Landlords and Landladies Who Do It Themselves by Leigh Robinson and Property Management for Dummies by Robert S. Griswold.

These are just a few of the many things you'll want to consider if you're on the road to owning rental property. This list is by no means comprehensive. I invite you to share any additional pieces of advice for would-be landlords, or to ask any questions, on our Owning Rental Property discussion board.

And find great tips on buying and selling homes in our Home Center, which also features some special mortgage rates.

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This article was originally published a year and a half ago. It has been updated and revised. Read reactions to its initial run in this follow-up article.

Selena Maranjian patronized landlords for nearly two decades before finally buying her own home recently. She owns shares of Costco, Wal-Mart, Home Depot, and John son & John son. For more about Selena, viewher bio andher profile. You might also be interested in these books she has written or co-written:The Motley Fool Money Guide andThe Motley Fool Investment Guide for Teens. The Motley Fool isFools writing for Fools.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.