Starting Out as a Landlord? Here’s What You Should Know
Becoming a landlord is an exciting endeavor. For one, it’s reasonable to assume that you’ve opened up some new revenue streams. But are you ready for all the responsibilities that come with the position? Amongst other things, you’ll need to stay on top of bringing in trustworthy tenants, maintaining the facilities, and collecting deposits. To help you prepare for this new journey, there are some important things to know before jumping in.
You’re Responsible for Property Upkeep
First, it’s important that you thoroughly review your state’s landlord laws. As the owner of the property, it’s your responsibility to ensure that everything is safe and in working order. Some of your legal obligations include:
- Repairs and Maintenance – In most states, landlords are required to perform routine maintenance and utility repairs. If something breaks and you don’t fix it within a reasonable time period, your tenant may be well within their rights to withhold rent payments.
- Building Security – Your building and tenant’s security is in your hands. You are legally required to put locks on all entryways and front doors. You also have to install peepholes. If a break-in occurs and you haven’t done everything in your power to secure the property, then you could end up being sued by your tenants for neglect.
- Pest Eradication – If there’s an insect infestation in your building, it’s your job to bring in an exterminator. In such cases, acting immediately is not only good business, but ensures that the problem doesn’t spread to the rest of your units.
Finding the Right Tenants
This part is not without its difficulties. Your goal is to find tenants that are respectful of your property, won’t cause issues with neighbors, and will pay their rent on time. Thing is, tenants can seem wonderful on paper or even in person, only to become a nightmare later on.
To bring in trustworthy tenants, consider the following:
- List the Property – To begin this process, you can advertise for new tenants in the local classifieds or with a service like Craigslist or Zillow. Food for thought: a paid-for rental service might yield higher-quality tenants.
- Show the Space – Not only is this a good way to help fill the space, but it’s also your first chance to screen potentially unsuitable renters. Take the time to familiarize yourself with the prospective tenants. We all know how important first impressions are.
- Use a Screening Service – If the prospective tenants are interested in the place, enlist the help of a tenant screening service. The background check also includes a credit and criminal history check. This will guarantee there are no liabilities you’re not aware of.
Prepare Legal Agreements for Signatures
Speak with your attorney and ask them to draft a watertight lease agreement. Also, take the time to review all your legal obligations, any possible insurance requirements, and your overall liabilities.
If an agreement is made, you must have your tenant sign the lease and pay the security deposit. Once that’s done, your first action should be to scan and then store the physical the contract.
Collecting Rent
Rent is your source of revenue. You’d be amazed by how many landlords adopt a laissez-faire attitude when it comes to collecting rent or pursuing late fees. If your tenants are open and communicative, then it’s fine to forgive a late payment. However, if your clients ignore you or miss multiple months of payment, then you need to begin the eviction process.
To ensure that payments come in on time, consider transitioning to an online rental payment service. When tenants sign up for this service, their rent payment is automatically sent on the due date and deposited to your bank. This mitigates any worries you have about tenants forgetting to drop their checks off, or simply failing to pay.
Cover Your Bases
If you want your rental property to become a source of revenue, you need to ensure that you’re serious about the job. By taking the proper precautions, whether screening or maintaining the unit, you set yourself up for success and minimize the chance that you’ll run into issues with your tenants.
