When you invest in a property, your ultimate goal is to earn profits. Anyone can be a landlord, but not everyone can be successful in this venture. Approximately, there are 10 million landlords in the United States alone. These people know that becoming a rental property owner is one of the best ways to have a steady income and seize appreciation for the long-term.
Although becoming a landlord can mean that you will gain from your investment, it takes a lot of hard work to achieve this purpose. From renting the unit or the property to managing daily activities, being a landlord means that you should be ready to carry out tons of duties that go, along with this particular job.
You need to know about a few critical steps to make sure that your job as a landlord runs smoothly. Here are the things that you need to do that will help you protect your interests for the long-term and at the same time perform your responsibilities efficiently:
1. Get to know your tenants.
If your property has tenants, it helps if you take the time to meet and talk to them personally. Ask about how they like living in the property or the unit. During this time, it is useful to know if there are any issues that they would like resolved. You may also want to review the current lease of the renters. Remember though that you cannot make any changes, such as the terms or the rental rates until their contract expires because the current agreement binds you, unless there is mutual agreement.
2. Finding new tenants.
When finding tenants, one of the most significant things that you should do is to stick to the basics when you advertise the property. Use print ads, signs, bulletin boards, flyers, and online posts. While doing these advertising activities, you should determine your target market. It will help you advertise accordingly. For example, if you plan to post your ads around the universities in your area, you will most definitely attract college students.
Additionally, it is useful if you highlight the features that the potential applicants will find appealing. For instance, if you have a single-family home located in a suburban area where there are lots of families around, it may be useful if you underscore the proximity of the property to parks or schools.
Another essential reminder is to know about the Fair Housing laws. It is not advisable to show partiality to certain types of tenants, such as older people or college students. As much as possible, do not hint that your unit or property is not suitable for disabled persons or families. You can talk to an attorney to review your ad if you have doubts about its wording.
3. Screen and assess the potential tenants.
Some landlords make the mistake of skipping this stage by not performing a thorough background check on the applicant. His or her history in renting a property is critical in determining whether or not the tenant is reliable in taking care of the unit and paying the rent on time.
You do not want to overlook this specific step because it will put your investment at risk. Plus, it could potentially result in a great number of headaches and unwanted expenses down the road. It is crucial that you screen the tenants for their credit and criminal issues, along with rental and employment history.
You can hire a screening company that will help you perform the research following the law. It may seem costly, but it will be well worth it in the end.
4. Have a well-written lease.
Whether you will rent out the unit to a family member, a friend’s friend, or a person you trust, you should still protect your investment by using the right forms. Ensure that the tenant will sign the lease that explains all the important information.
He or she should also provide pertinent details, including the name of the tenant, the address of the unit, your name as the landlord of the property, and the length of the lease among others. As much as possible, have all these things in written form and avoid any oral agreement.
5. Manage the daily issues.
Being a landlord means that you should have enough time to supervise and deal with the issues that will arise in the property and with the tenants. Get adequate insurance and consider requiring the people who will live in the unit to carry insurance as well. Of course, you need to check the local laws first before you make it a requirement. With the right insurance, you can protect your property from natural occurrences that may cause damage and at the same, from irresponsible tenants as well.
Most landlords do not have this responsibility as their full-time job. Without a doubt, managing the day-to-day problems can be very demanding and may require you to be on the site almost every day. If you have another job or other duties, it makes sense that you hire a property manager to help you with the tasks of overseeing the property and the tenants.
Becoming a landlord means that you have to be involved in the daily operations, which requires you to have enough time on your hands to handle some problems. Additionally, you have to be handy and be close to the rental property to address the issues in case the tenants call you, and they need your guidance.
With the help of a property manager, landlords can still supervise the tenants in the property while still having time to do their other responsibilities. Property managers can work for you and provide full services, or you can hire them to help you with certain issues.
For instance, you can have a property manager who will handle the work of finding and screening tenants. Most of these people are handy or at least know who to call when a pipe burst, for instance, in the middle of the night. Property managers can also make sure that landscaping, collecting rents, and sending notices are performed whenever necessary.
Some landlords are worried about hiring property managers because they believe that these people will only eat into their profits. However, if you hire the right professionals, you will find that they will give you more benefits, such as helping you save more time and avoiding aggravation and hassle.
7. Take care of lease renewals.
Lease renewals are a great way to enjoy a steady stream of income flow from the property. One reason is you do not have to spend time and effort in finding and signing new tenants. Plus, renewals typically mean that you have a good tenant at hand because you will not re-sign an existing one who is giving you headaches.
Renewals, however, require you to be a dependable landlord. Therefore, you have to make sure your tenant is happy. The good news is there are lots of ways to achieve this, and most of them are quite simple, such as replacing the old appliances and worn carpet. You can also apply a fresh coat of paint in the living areas.
Tenants may feel comfortable with the small increase in rent if they get something in return, such as a ceiling fan or a new refrigerator.
8. Know how to handle evictions.
While renewals are often the easy part, evicting the current tenants can be tricky. The eviction rules vary from one state to another, so you may want to seek legal advice if you are not sure about how you can get rid of a tenant who wants to stay.
To ensure that you will not have problems, you should keep your records that will serve as evidence of your claim. If there are problems, send the notices on time. Proceedings that have something to do with evicting a tenant can take a lot of time and can cost you money. For this reason alone, you will see how important it is to screen the tenants carefully while making sure that you hold on to the reliable ones. This reason alone is why some landlords choose to have a property manager handle the entire management of the rental for them. Here at American Dream Homes, most of the landlords we assist choose to have us handle the entire process for them.
Treat Being a Landlord Like a Business
It is OK to be kind and friendly with your tenants, but there should be rules that you should impose, such as when they do not make payments on time. Often, landlords do a terrible job at running and managing their rental property because they do not see their work as a business. They treat the investment as a hobby and not as a profession.
To be successful, you have to see being a landlord as a job and treat it with respect. It requires work to thrive in what you do. It can be frustrating and exhausting, but when done right, being a landlord can be profitable and rewarding.
With the steps above, together with the help of the right people such as a lawyer and a property manager, you have a great chance of becoming a productive landlord for your rental property.