First Time Landlord? Here’s What You Need to Know
If you are not familiar with the trials and tribulations of property management, you might think that being a landlord is the most straightforward job imaginable.
After all, owning a property is a stable source of passive income. You can use that money to pay off your mortgage or some other debts or even gain equity and start saving up. Sounds like a dream come true, especially in this economy.
However, if you are a first-time landlord, there are some basic things that you need to know right away. The main thing that you must accept right away is that renting a property demands a much more hands-on approach than you might think and that being a landlord is a venture where you will have to learn, adapt and grow constantly.
There is no end-all master list that you can read and be prepared entirely as each property is different and demands unique steps, but once you have read this article, you will learn about the most common duties and pitfalls, dos, and songs of being a landlord. So let’s get started!
Treat Renting Your Property as a Business
Since your rental property will – hopefully – be a source of income for you, you should treat it as a business, even if it is not your primary source of money. Therefore your best course of action would be to stop some problems with your rental unit from happening before they even occur.
Before you start searching for potential tenets, you should inspect your property and do the necessary repairs and maintenance. Once again, the old saying is true – you have to spend money to make money, but it will all be worth it in the end.
Before you open the doors of your rental property, ensure that you have working carbon monoxide and smoke detectors set in place and replace the batteries where needed. Also, make sure that there is no debris or mold in the vents and that pipes are in good condition.
Finally, be prepared to call repair professionals – roofers, electricians, and others – if you notice that something is not correct. Do not tackle any tricky repairs unless you are a pro yourself.
Legal Matters and Pricing
Before you start earning from your property, you should also get to familiarize yourself with the local fair housing laws. These laws are set in place to protect potential tenants from different forms of discrimination.
Even unknowingly, you might be facing charges if you break these laws. The best thing you can do is consult a lawyer who specializes in landlord-tenant laws since there are different laws – on the state, federal and local level – that you must comply with.
When it comes to determining the right price for renting your property, you will need to do some research. Check out the prices of similar properties in the area and try to position your property somewhere in the middle price-wise. Even a price that seems too low can drive potential renters away.
Marketing and Tenants Screening
Once you have determined your ideal price, it is finally time to start marketing your property. You might use word-of-mouth as your primary marketing tool, but that is not very likely. Instead, post your listing online.
Even a simple ad in your local Facebook group might be enough to do the trick. Just remember to go into as much detail as you can when describing the property and o post plenty of high-resolution photos. The more information you provide from the start, the fewer questions from the interested parties.
Once that people start reaching out to you, it is time to begin the screening process. You should approach this task very seriously as you don’t want to end up with a tenant who doesn’t pay the rent on time, not to mention someone who might abandon your property and leave it in bad shape.
Evicting bad renters is a costly and long-lasting process, so do everything you can to avoid such a situation.
Besides asking the potential candidates the standard set of questions – about their job, earnings, and so on – you can also do a background check on them and even check their credit and criminal report.
Remember to also ask for referrals so you can contact previous landlords and ask them about their experiences with your potential candidate.
Dealing With Legal Paperwork
Finally, for legal protection, you should have a lease agreement signed.
The agreement should involve all the lease terms – Are pets allowed? When is the rent due? Who is responsible for minor repairs? – as well as describe your rights and duties.
Just to be on the safe side, now is the right time to visit your lawyer once more and make sure that all the points in the agreement are legally valid.
Once the paperwork is complete, make sure to enforce the rules written in it. Do not be too easy-going, or your tenants might take advantage of you and negatively impact your monthly income or even cause severe damage to your property.