Many people believe that being a landlord is a hands-off occupation and that once the property is rented to tenants, revenue rolls in routinely. In fact, being a property owner and leasing your home (or homes) to others can prove to be a complicated choice. Landlords must be astute businessmen or businesswomen who possess conviction and are detail oriented.
If you’re considering this job, here are a few tips on how to be a successful landlord.
Tip #1: Familiarize yourself with the rules and laws that apply.
Remember, a landlord is a business owner, and like any business owner, you have to get everything in order before renting your property. Speak with a real estate attorney to ensure you’re familiar with laws governing tenant/landlord relationships, as well as fair housing laws. Make an appointment with a certified public accountant to establish a budget and figure out how much rent should be charged for your particular property in order to yield a profit. Also, you should open a business banking account and keep all financial transactions related to renting your property confined to this account (or accounts), as opposed to your personal accounts.
If this seems daunting, you can also consult an experienced property management company for additional advice and resources on simplifying some of the more convoluted steps involved in becoming a successful landlord.
Tip #2: Invest in tenant screening.
Especially for new landlords, there is the pitfall of leasing to less than ideal tenants. Don’t assume because he or she is a friend or family member that the process will go smoothly. Tenant screening should be time consuming and thorough to ensure you rent to reliable, courteous and financially capable tenants.
Require references and follow up with previous landlords. Proof of income can be requested to guarantee that there are adequate funds to maintain rent payments. Some landlords pull credit reports or run background checks for extra security.
Property management companies can be of value here, as well, providing you with pre-screened and pre-qualified tenants for your review.
Tip #3: Set the stipulations of the lease firmly and don’t cave.
Many landlords become emotionally invested in their tenant’s lives and let late rent payments or minor property damage slide. The tenant/landlord relationship must be based on mutual respect and dependability to properly function. Use a firm hand to enforce the stipulations of the lease.
This also applies to evictions, which can be problematic because of the tension involved. If you’re not business-oriented, strong-willed and willing to follow through with the eviction process if tenant behavior deems it necessary, you may want to look into hiring a professional property management company to help.
Tip #4: When in doubt, over insure your property.
This is something you can speak with your real estate attorney about, but it’s no surprise that we live in a litigious society. Regardless of whether you’re renting one home, you own an apartment complex or you have multiple properties, you must go through the proper channels to acquire adequate insurance coverage, both to protect your tenants and for self-preservation.
Being a successful landlord is dependent on a number of factors, namely your involvement; understanding of the proper processes, laws and governances; willingness to ask for professional help when it’s needed; as well as your ability to multi-task and enforce the terms outlined in your lease agreement. Especially if you’re just starting out, speaking with a property management company, like Boundless Management, can be of tremendous help.
