6 Things Every Landlord Must Know
Having a rental property can be a great source of income. Aside from the tax benefits, you get a steady stream of cash flow. On top of that, real estate appreciates which makes it a great long-term investment. But as with every other investment, there are certain risks involved when buying a property with the intention of renting it out.
Managing a rental property can be as complicated as any other business there is. This is especially true for first-time landlords. It isn’t as simple as buying a property and looking for a tenant. There are certain rules and laws that every property owner must first be acquainted with before taking the jump and becoming a landlord. Here’s a guide on the ten things every landlord must know:
#1 STUDY THE HOUSING MARKET
A quality every good landlord must have is diligence. In this aspect, a good landlord must first make it his or her duty to study and understand their housing market condition. Start by doing research on your competition. How many rental properties of the same specifications are there in the area? How are they pricing their properties? What do their properties look like? These are some of the basic questions every landlord must know before diving into the business of rental property.
Research may also be in the form of recognizing the opportunities in the market. What do the local demographics look like? Are there a lot of college students in the area? Is it a family-friendly neighborhood? Or is it near the business district with a lot of young professionals? This basic information is extremely valuable as it can help you better prepare your property to cater to the needs of your audience.
#2 BE PROFESSIONAL
In order to get a good return on investment from your rental property, maintaining a good reputation is key. For most, having rental property and being a landlord may not be their main source of income, but it is still nevertheless a business. Maintaining a good reputation all boils down to how professional you are as a landlord.
Whether it’d be by following and complying with local laws or ensuring that the concerns of your tenants are being addressed accordingly, all of these play a factor in your reputation as a landlord. There are a number of federal and state-specific laws enforced on rental properties, ensure that you do your research and understand these laws to avoid future conflicts and issues.
Lastly, being professional also entails doing your best to ensure that your rental property safe and well-kept for your tenants to live in. From checking your smoke detectors to ensuring that your vents are clean and safe, these details will help make your tenants’ experience better. Overall, these can ensure that your tenants are satisfied with your services and can help you grow your business through great reviews.
#3 GET HELP
One of the pitfalls of rental property owners is taking on all the responsibilities of a landlord even when they can use the help. Ideally, landlords would be living near the property and have an ample amount of time to handle every aspect of their rental property business, but this may not be the case all of the time. This is where hiring a property comes into play.
A property manager is ideal for landlords who don’t live near their rental properties. If you live far from your rental property, it may be difficult to consistently drive up to your rental property to collect rent payments. Moreover, tenant issues may arise from time to time and it may not be ideal for you to spend an hour driving to your rental property every time something arises. Your property manager can handle those tasks for you. Although you will still be responsible for maintaining the property, you can now rest easy knowing that someone is always on top of your responsibilities as a landlord.
#4 SCREEN YOUR TENANTS
Screening your tenants is a crucial responsibility of every landlord. As mentioned above, your rental property is your source of income and your business; in this regard, your tenants are your partners. In any type of business, you would never agree to have someone as a partner without doing a proper background check.
You would want to ensure that your tenants have no red flags. Be it from their credit history or criminal background, it is important that you only accept clients with good track records. If upon checking, you discover that your applicant has a history of undue payments or prior eviction, then those should be enough for you to decline that applicant. It is vital that you are able to check for these things prior to accepting any tenant in order to avoid future issues.
#5 WRITTEN AGREEMENT
When it comes to rental properties, it is best to have a written rental agreement ready. This written agreement must state all the responsibilities and expectations that each party has to and from each other. This must include both state-specific laws as well as your personal preferences. Try to be as specific as you can as this document will be your basis should any conflict arises. Cover all ground with your rental agreement. From payment schedule to your homeowner’s association guidelines.
#6 ORGANIZE YOUR RECORDS
Lastly, a good landlord must have a good system to keep all records organized. From receipts to agreements, and any form of communication between the tenant and landlord. These records can be either be physical or digital, so long as you have a proper system in place and are able to locate them immediately should the need arise, you’ll be fine.
This will come in handy should there be any conflicts between you and your tenant. It is a good idea that everything is well-documented in writing. Although oral agreements may work from time to time, having written agreements or written proof still works best.