Note from Darnyelle: This is a guest blog post and I was inspired to include it because my hubby-to-be and I have been thinking about diving into real estate. For any of you who own and rent property (or are considering it like we are), this is a great read!
If you’ve taken the leap into the rental business, you’ve recently come into a great deal of responsibility. While becoming a landlord can offer fantastic opportunity for profitability, there are drawbacks to this career move. As you screen tenants and learn the ins and outs of property management, keep these tips and strategies in mind.
Run Background Checks on Your Applicants
First impressions aren’t everything. A prospective renter might be able to schmooze like a pro, but if their credit history is poor, or if they have a criminal record, you may want to think twice about taking them on as a renter. When choosing a tenant from a pool of candidates, use background checks to your advantage. The right service can provide you with the information you need to place a great renter. With employment, criminal and credit checks for landlords, you can get a more comprehensive view of every applicant’s history. This knowledge is invaluable; the more you know about a candidate, the better able you are to determine if they’re the right fit for your apartment or home.
If you’ve yet to purchase a rental property, consider buying in your immediate area. It’s helpful to live near to your rental properties, as you’ll have the ability to check in and perform maintenance when necessary. The best landlords are readily available; legally, you’ll be tasked with fixing issues in a timely manner. The closer you are, the easier it is to fix. You may not make the repairs yourself, but arranging for a trusted professional to handle any issues that arise will be much easier when you live in the community.
Set Ground Rules
It’s advisable to have an amicable relationship with your tenants, but you don’t need to become close friends. Remember: you’re running a business. When rent is late, charge a fee. Letting it slide once means letting it slide every time after that. While sympathy and empathy are admirable qualities, they generally don’t have a place in rental property management. Be kind, but remain firm. Tenants should understand that late payments mean late fees (just be sure to put this stipulation in your lease). You can still form a good relationship with your tenant, but at the end of the day, you have to put your business first.
Understand the Legal Stipulations and Ramifications
There are plenty of laws—local, state, and federal—that will guide your decisions and actions as a landlord. Specific landlord-tenant laws can vary by state, and these rules may cover a wide array of allowances. Being a great landlord means understanding the ins and outs of every law and regulation. It can be easy to breeze over all the legal jargon and stipulations—don’t fall into this bad habit. Take your time and do your research. Make sure you understand the specifics of your new venture. How much notice do you need to give tenants before stopping by for a visit? What are the rules on eviction? It’s a good idea to meet with a real estate lawyer well-versed on the industry and get the 4-1-1 before getting started.
Make a Wise Investment
While managing a rental property can offer amazing profitability, it’s important that you do your research before making an investment. If this is your first foray into the world of real estate, consider consulting with a seasoned professional, or taking a few real estate classes to get your foot in the door. If this is your first purchase, take your time selecting the property. Make note of areas that offer the best return potential, and factor in the costs you’ll need to cover; you may not turn a profit for several months—maybe even up to a year later. Before putting any type of down payment on a home or taking out a mortgage, hire the services of a building inspector. They can take a look at the property and spot potential issues you might not even think to look for.
If you want to be an amazing landlord—and pull in a great supplementary income—use these tips and tricks to your advantage.