How To Become A Landlord
The ultimate goal of investing in rental property is to turn a profit. To ensure that you achieve that goal it is essential that you follow several critical guidelines. Most of us dream of becoming a landlord but it an easy or a difficult job? Before you start searching for a home to rent, you should think about the responsibility that comes with being a landlord to your tenants. If you’re interested in investing in real estate, the single-family rental market might be a good option. Being a landlord can be a profitable venture that provides a steady income stream while your property appreciates in value. You might also be able to enjoy certain tax advantages while you build equity in the home.
Here are 8 valuable tips for becoming a successful landlord and start a rental property business.
1. Screen Your Tenants
First, always make sure that you check tenant references. This is the first step of becoming a successful landlord. This can be a burdensome step and many landlords overlook it because they feel as though they have good instinct when they meet with the tenant. But not checking references can lead to a number of problems later on. You will uncover a wealth of information about potential problems before you rent to a prospective tenant. It’s also worth the time to do a background and credit check on all potential tenants. There are several online tenant-screening services available, and you should be sure to check potential tenants’ credit scores. You should also conduct an interview to make sure you’re comfortable interacting with them, and check references, especially from employers or past landlords.
2. Draft a Lease Agreement
Second, make sure you have everything in writing. This is to protect your rights as a landlord as well as the rights of your tenants. Everything from the code of conduct you expect your tenants to abide by while renting your property to the rental application itself must be in writing. For example, if you allow pets, specify how many, what kind, and any rules that apply.
There are a number of online services that create a customized lease based for the state where the rental is located. Important items to include in a lease are clear statements about who is responsible for various tasks, such as maintaining the yard to ensuring upkeep of all sorts of appliances that you have provided to your tenants. You can even hire an attorney or a property manager to customize a lease for you.
3. Perform Regular Inspections
Third step in becoming a successful landlord is that you have better success with your rental property if you take the time to ensure that it is both secure and clean. The grounds of the property should be free of litter and trimmed regularly. Not only will the property be more visually appealing but these actions will also assist you with property liability. You will also want to take additional security measures.
Extra security may be able to lower your insurance premiums as well as provide an incentive to quality tenants to rent your property when they know it is secure. You can take pictures to document the move-in condition and then conduct an inspection after every three months. You can even put an inspection clause in your lease so that your tenants are aware of it.
4. Hiring Property Managers For Your Rental Properties
If you decide to hire a property manager, take the time to interview prospective candidates very carefully. Property managers can be very helpful if you don't have the time to manage the property yourself. This is especially true if your property is a long distance away from you. The wrong property manager can cause you problems with poor tenant screening and delayed lease up times. This means that you will need to hire a thoroughly responsible and professional individual to handle the job. Always ask for referrals.
Involving a property management firm will also save you the stress of worrying about your investment. With a management firm overseeing your project for you, you can get to relax wherever you are knowing that everything is alright. It’s reassuring to know that there’s someone trustworthy taking care of your property, placing in tenants, and ensuring that all is running smoothly.
5. Obtain Adequate Insurance
Always make sure that you obtain adequate insurance. Not only should you have property insurance but you should also have liability insurance. One incident is all it takes to wipe out your investment. Also check with your state to determine if any additional insurance coverage is required.
6. Handle Repairs Promptly
Regardless of the condition the property was in when you purchased it, there will come a time when repairs are needed. This is part and parcel of owning rental property. If you take too long to make repairs, not only will your property suffer and repairs will ultimately cost more to take care of but you will also likely lose quality tenants as well. By making sure you handle repairs promptly you will be able to maintain the life of your property as well as retain good tenants.
7. Follow Regulations
Always make sure that you follow all applicable regulations in the renting of your investment property. The Fair Housing Administration Act provides precise regulations in order to prevent discrimination. If you violate those regulations you could find yourself facing a lawsuit that is costly in terms of time as well as money. The best course of action is to take the time to do your homework and consult an attorney experienced in real estate matters for guidance regarding the FHA as well as ensuring that you have the proper forms. Good property managers will already be versed in these regulations.
Finally, make sure that you do not violate the privacy of your tenants. Check with your state's regulations to find out whether you must provide any type of notice to your tenant before you enter the dwelling.
8. Landlord Readiness
Being a landlord is not as simple as collecting rent. It is important to consider the time, obligations and responsibilities involved before making the decision to become a landlord. You need to comply with local, state and federal rules, laws and regulations. You need to be ready to accept the risks associated with being a landlord. If you have bought your rental property through mortgage, you need to make the mortgage payment even if the property is vacant or your tenant hasn't paid his or her rent. Vacancy periods are a reality and can affect your cash flow. Lastly, you need to afford the time and costs associated with maintaining a “habitable” rental property.
Following these guidelines will help you to retain good quality tenants and avoid any potential legal problems. After all, happy tenants make for happy landlords!