If you’re taking on the title of landlord in the near future, there are various things you need to be prepared for: legal issues, everyday stresses, and tenant expectations. We’ve compiled a list of simple rules for all first-time landlords that can make navigating your exciting business choice a whole lot easier.
- Be Realistic About Your Profit Timeline
Becoming a landlord can be an extremely lucrative move, but be realistic about when you will actually see the profits from your investment. Sometimes capital will be made within the year, but more often than not, it may be more of a five- or 10-year goal, especially if the upfront costs on the property set you back to begin with. Make sure you budget correctly for this venture, and be aware that renting properties will see a fair share of cost as time goes on for repairs and the like.
- Get a Handle on Regulations
There are many legal requirements that landlords are expected to abide by. Renting out property is a business decision, and as any business must follow regulations on the local, state, and federal levels, so must you. Take the time to do your homework before renting out any sort of property. Make an investment in some legal counsel to ensure everything is in order; this will help you avoid legal issues in the future. Every state goes by different specifications, and this is complicated even further with county and city ordinances. Talk to your local city government to find out about any legal regulations you may not have been aware of, do a google search of federal and state ordinances you’ll need to follow, and be prepared with an attorney should any issues come up.
- Invest Your Time
Understand that becoming a landlord is a full-time job in some cases. Many first-time landlords mistakenly think of their new venture as a hobby when it should be taken seriously as a new business role. If you forgo getting a property manager, you’ll be on call for anything that should go wrong with the rental for tenants. Perhaps a pipe breaks, or the heat dies out in the middle of winter. It will be on your shoulders to get the problem fixed as soon as possible and respond to your tenants in a timely manner—not doing so could leave you vulnerable to a cache of legal ramifications.
- Hire A Property Manager
Decide from the get-go if you will need a property manager. The right property management company can handle a bevy of issues and take a ton of responsibility off of your shoulders. This is an especially wise decision if you are busy with a primary profession or are often out of town. Property managers will help you market your rental appropriately, do the face-to-face interactions with tenants, and handle things that come up, from things as small as repairs to eviction.
- Pick Your Tenants Wisely
Nothing can make the landlord experience worse than renting for the first time to a bad tenant. Make sure you take your time to vet the people you’ll allow to live in your property. Using a service like Smart Move can really help you expedite the process. This will allow you to check their credit score, learn about their previous tenant experiences, and determine if they have a criminal record. This one-step process can save you a lot of stress and money in the future, and you’ll feel secure handing over the keys to your property—and assets in general.
- Protect Your Property
Make sure you have the right insurance for your property. Many things like natural disasters, sewage issues, and freak accidents are not covered by run of the mill coverage. Speak with your insurance agent and outline the best deals for your rental. While extensive coverage isn’t applicable or available for all properties, it’s good to go into a landlord venture with knowledge of the potential risks and expenses that could occur.
When you’ve made the decision to rent out your property, make sure you’re prepared for the daily grind and the immense costs that can come along with this business venture. While this decision can be the best you’ve ever made, do your due diligence to know the regulations, finances, and expectations involved.
Categories: Real Estate