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Being a landlord can be a rewarding experience, but it also comes with a lot of responsibilities. Here are some tips to help you navigate the process:
Screen tenants carefully:
Before renting out your property, it's important to screen potential tenants thoroughly. This includes running a credit check, verifying their employment and income, looking them up online, and checking their rental history.
None of these tactics is to discriminate in anyway, but it is important that you make sure your potential tenants are who they say they are and that they are going to treat your property with respect. It's good to always ask for a copy of a valid ID to keep on file with the signed lease for your records.
Understand your legal obligations:
As a landlord, you have a number of legal obligations that you need to be aware of and nearly all of them should be indicated in your lease. Have an attorney write up and overlook any leases you ever use. Just to name a few, these legal obligations can include ensuring that your property is safe and habitable, following fair housing laws, attaining a rental license with the city (if needed) and providing notice before entering the property.
It's also important to understand the eviction process in your state, in case you need to remove a tenant for nonpayment or other reasons. I would even go further to suggest looking into the landlord laws and regulations in your state and city before even choosing a location to invest in if you have the ability. Some states and cities are more "landlord friendly" than others and this can greatly impact your experience as a landlord!
Set clear rules and expectations:
Make sure that your tenants understand what is expected of them by creating a clear set of rules and expectations. This can include things like no smoking or pets on the property, a deadline for rent payments, and procedures for requesting maintenance or repairs. Again, this should all be written out in your lease to best protect yourself and your property. Make these rules and expectations as clear as possible so there is no "grey area".
Maintain the property:
As a landlord, it's your responsibility to keep the property in good condition. This includes regular maintenance and repairs, as well as ensuring that all appliances and systems are in working order. It's a good idea to establish a regular schedule for inspecting the property and addressing any issues that arise and to have an open line of communication with your tenants so they know to inform you as soon as anything goes awry or stops working.
Something I have learned is to schedule and conduct regular bug sprays with a remediation company. This helps keep the property as clean as possible, even if your perfect tenant isn't the most sanitizing clean-freak in the world.
Communicate effectively:
Speaking of keeping an open line of communication with your tenants, good communication is key to being a successful landlord. Make sure to respond to tenants' concerns and requests in a timely manner, and be open and transparent about any changes or issues that may arise. When something breaks or malfunctions, put yourself in their shoes. Would you appreciate a landlord that is doing everything in their power to get the issue resolved as quickly as possible?
Set the rent at fair market value:
Setting the rent at a fair market value will help you attract and retain tenants. Research comparable properties in your area to determine the going rate for rent.
Keep in mind that setting the rent too low may indicate that the property is in poor condition or that you don't care about it, while setting it too high may make it difficult to find tenants. Tenants that feel like they are overpaying tend to like to make your life difficult or expect the unattainable.
Have a plan for handling rent payments:
Establish clear procedures for collecting and handling rent payments. This can include setting up automatic payments, providing online payment options, or requiring a post-dated check. There are lots of platforms out there like Rent Redi, an app for tenants where they can set up automatic payments where you can store copies of leases, list your rental, and do so much more.
While I wouldn't suggest it for long term situations or for everyone, I use Venmo for our mid-term renters. I find that mid-term renters (2-7 months) prefer the easiest, most efficient way possible to pay their rent and a platform like Venmo feels safe, is tested by nearly everyone nowadays, and makes returning deposits and pet fees super easy and smooth. Be consistent in enforcing late payment fees and be prepared to take action if a tenant falls behind on rent.
Understand your insurance needs:
As a landlord, you'll need insurance to protect yourself and your property. This can include liability insurance, which covers you in case a tenant is injured on the property, and property insurance, which covers damages to the building and its contents. Be sure to make it very clear to your insurance agent what your property entails. Give an estimate of cost of furnishings you provide for your renters and be sure to take updated photos of your property in case of an emergency.
A lot of investors wonder if they need an LLC for every property they own. After consulting with attorneys, tax professionals and our insurance agent, we have found that umbrella insurance policies cover us just as much, if not more, than having separate LLC's for our portfolio at this time.
Have a plan in case of emergencies:
Emergencies can happen at any time, so it's important to have a plan in place to handle them. This can include having contact information for emergency services and contractors, as well as a plan for how to handle a natural disaster or other crisis.
Stay organized:
Being a landlord can be overwhelming, so it's important to stay organized. Use a property management software or rent roll to keep track of tenant information and payment history. (Bing, bing, bing! Advertisement for Rent Redi again! LOL)
Keep copies of lease agreements and other important documents in a safe place, along with spare keys for each property in case you ever need to gain access to the property and your tenant can't be present.
By following these tips, you'll be well on your way to becoming a successful landlord. Remember to stay informed about the laws and regulations that apply to landlords in your area, and seek advice from a property management professional if you have any questions or concerns.
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