Whether you are a first-time landlord or a seasoned professional, knowing how to be an effective and efficient landlord can save you time and money on your investment property. There are a few keys to having a successful rental experience.
Treat This as a Business Venture
Whether you are going at it alone or have an investment team helping you along the way, you will want to treat this as a business venture. This might mean starting a limited liability company to begin this process. By forming an LLC, this will legally separate your personal assets and property from that of the business venture. This way if the business side loses any money, your personal assets are protected from being used to pay the business creditors. This can also protect you from potential rental related litigation such as an accident or injury occurring on the property. LLC regulations and processes vary by state, so check into what the fair housing laws associated with rental properties are in your state.
Know the Rental Rules
All businesses bring in revenue, in this case, it would be rental income. Be clear with potential tenants about what the rules are for rent payments each month (payment types you accept and deadlines), consequences for late payments as well as what may constitute eviction proceedings. While you may be carrying the insurance for the property, most insurance companies only cover the structure, not the contents. The contents would typically be covered by renters’ insurance, which your tenants should have in case of an emergency situation. Personal injury or liability insurance should be covered by the landlord as part of the homeowners insurance policy. If there is an accident on the property, you will likely want to contact a personal injury attorney for advice on how to handle the situation.
You also want to make sure your tenants are reporting issues that need to be taken care of quickly. Whether it is a leaky faucet or something more severe like sewer backup in the basement, reporting issues quickly should be top priority. These repairs can be costly (depending on how bad the damage is), so you should be prepared for such expenses and attend to them fast so that your tenants are not inconvenienced. A landlord not taking care of necessary repairs is a reason for those tenants to leave. In addition, how and when they report issues should be spelled out in a rental agreement.
Find Fabulous Tenants
Now that you have your property ready to go, all repairs have been made and it is move-in ready, it’s time to find some tenants. But before you let anyone move in, take pictures of everything and document what is in each room. This way when you have tenants move in or out, you know exactly what each space should look like. Finding the right tenants who are going to treat your rental property as if it was their own will be the type of renters you want. You’ll need a few tricks to find these people. You will want to use an online renters application. This application requires information like present and past addresses, previous landlord contact information, employment information and reason for moving. If the potential tenants say they are moving because they didn’t pay their rent, these may not be the right people to put in your investment property. The application also asks whether they smoke or have pets because these are things that can cause damage to your property.
Investigate Potential Tenants
Using a tenant screening system to eliminate less-than-desirable renters from the process can save tons of time and money in unnecessary repairs. Some tenant-screening systems also run a credit report and criminal record search. You can set parameters so that tenants who do not meet your minimum specifications are not selected and offered an opportunity to rent your property. By not screening your tenants, you run the risk of your property being damaged beyond repair and high repair costs to you. This lessens the profit on your business venture in addition to your having to repeat the process over and over.
Being a landlord is not rocket science, but it does require that you stay on top of your investment. You may need to act quickly if issues need to be taken care of for the safety, security and ongoing happiness of your tenants. If your tenants are happy month after month, they are more likely to stay with you for the long term.
