So, you think you want to be a landlord? With the decline in home ownership over the past few years, the rental market seems to be holding strong. However, before you jump in, you need to know that property ownership is a lot different than being a landlord. With that in mind, you’ll want to make sure you’re aware a few basics, as well as what you’ll be responsible for. Here are a few tips to help get you started:
How to Determine Returns
While managing a property can potentially be profitable, you’ll want to make sure you do your homework before investing. If you haven’t already purchased property, you’ll not only want to research the current market, you’ll want to know what areas and locations will have the highest returns. Additionally, you’ll have to factor in how much you’ll need to charge in order to cover the expenses of maintenance, property taxes, the mortgage and the like.
When you’re doing your taxes as a landlord, we recommend seeking out a tax professional and using a service like Liberty Tax. We also suggest you research landlord tax deductions so you’re aware of what money you could possibly get back on your taxes. It’s always better to be informed.
Screen Tenants Properly
While you may not have to live with them or see them every day, you don’t want just anyone living on your property. Screening renters helps you assess a prospective tenant’s eligibility by uncovering any credit concerns, eviction or criminal offenses, and employment gaps.
In addition, it’s a good idea to meet with your potential renters in person so you can ask questions and get a feel for who you’ll potentially be entrusting a portion of your investment to.
Some good questions to ask are: why are you moving, why is your monthly employment, and how many people will be living on the property (just make sure you brush up on your rental laws and review questions which could be considered discriminatory). It’s also beneficial to ask applicants to provide references from employers or previous landlords.
How to Set Boundaries
Make sure you set a good precedence when it comes to paying rent. Tenants should know exactly when rent is due, where it should be delivered, what form of payment is expected and the consequences for not paying on time. It’s usually good practice to require tenants to pay a late fee should they fail to deliver or for checks that bounce. Cultivating healthy relationships with renters doesn’t mean you have to be rude or mean, you just don’t want to get into a situation where you begin allowing partial payments for someone who lost a job and end up getting in tight financial situation yourself. Be friendly, but always remain firm. 
The Cost of Turnover
One of leading causes of lost profit when it comes to rental properties is tenant turnover. You can help combat this risk by screening – and screening well. Getting good people in is a must. Once you do that, you need to make sure you take care of those people. Remember their birthdays and send cards on holidays. Take the time to let them know you appreciate them! Maintain your property and make sure to be both responsive and available when any issues arise. You may also want to consider offering incentives to tenants who help fill vacancies or reward tenants who consistently pay rent on time with an end-of-the-year bonus. Little things can go a long way to ensuring good tenants stay!
The Importance of Being Local
It’s best if you live close to your property so you’ll be able to check in from time to time, assess repairs, or show the space to possible renters. If this kind of thing doesn’t sound so interesting to you, than you may want to consider hiring a property management company to take care of the those kinds of day-to-day details. However, if you are planning on being your tenant’s primary contact for any sort of issue, you probably won’t want to have to drive more than an hour to check out the problem or to supervise any sort of maintenance.
The Rental Law ABCs
Depending on the state you live in, there are specific landlord-tenant laws which cover issues from access level, deposits and anti-discrimination. It’s important that you read the fine print as many new landlords skim housing laws and often miss some very important details that could potentially lead to legal disputes in the future. Make sure you know how much notice you need to give renters before showing up to inspect the property or how many days renters should be given to gather their belongings should you need them to vacate. Fair-housing violations go way beyond just discrimination, so make sure you’re aware of the details that pertain to your state and don’t end up in a trap.
