There is never a bad time to be a landlord. Even during the housing crisis or oversupply of housing, being a landlord has always been a stable way of earning income. And for many people, being a landlord and renting their properties are the only ways to work toward retirement.
If you’re planning to rent out your property, however, you need to know a few basic things. Because no matter how stable and secure being a landlord is, things can go wrong. So, before you rent out your property, use these tips to help protect your property and be the best landlord you can be.
Screen your tenants thoroughly
Is it worth it to let troublesome tenants in? The answer is hard no. Troublesome tenants will only cause you problems and headaches. The amount of money you get isn’t going to be worth it, especially in the long run.
Therefore, you need to do an interview with each tenant. Ask everything you need to ask such as previous landlords’ references, name, employer, salary, criminal history, credit card score, etc. The more you know about the tenant, the better it is for you. So you can make an informed decision and know that the tenant is good.
You can also hire a professional to do the background checks for you. There are many such businesses you can find online. This is useful for landlords who handle many tenants and can’t do a background check on everyone.
Decide on the rent amount
How much rent you charge is going to be the biggest deciding factor for many people. If your rental charge is too high, people just simply won’t come, unless you can provide a high-quality service that matches the fee.
The easiest way to decide on the rent amount is by checking the local newspapers, online websites, or neighborhood rental signs. Learn how much other landlords are charging and check out their buildings. It’s important to charge just the right amount of rent that fits your building and is comparable to what’s in the market.
Don’t forget a lease
A written lease is a tool that can protect everyone who is involved, including you, the landlord. This kind of written agreement helps everyone understand their rights and obligations. A well-written lease complies with the rental, tenant, fair housing, and insurance laws of your region. These laws may vary from state to state, counties to counties, and locals to locals. So, it’s a great idea to consult with a local lawyer to create a lease for your rental business.
Never ever use a blank lease from the internet as it may not be compliant with the local laws. To make it easier for you, here are some important things that a lease should have:
- Security deposit, typically one month’s rent or a bit more.
- Lease term: monthly lease offers more flexibility for both parties, while an annual lease offers more stability for you.
- Rental due date and late penalties if any.
- Maintenance and repair responsibilities, who is responsible for what repair.
- List of tenants.
- Rules of behavior such as noise levels, pets, and related deposits, smoking indoor/outdoor, neighborly conduct, etc.
- Who is paying homeowner association dues if any.
- Association rules that every tenant must follow.
- Eviction terms from breaking some rules, such as not paying the rent, damaging the property, disturbing other tenants, etc.
It is important to protect your property in case something bad happens, and yes it can happen to you too. Insurance for a rental property is different from your primary residence. As a rental, you need something called rental home insurance. This policy covers your legal costs, medical expenses, loss of rental income (in case of repairs), and home structure. It is also a great idea to tell your tenants that they need to buy renters insurance, since you are not responsible for their belongings.
Being a landlord can be tricky and difficult, but as long as you cover all the basics, I can guarantee that everything will go smoothly. Now all that’s left is just doing your job as a landlord by monitoring your property and tenants. Make sure you follow all your obligations, and your tenants will do the same with no hesitation.