Investing in real estate is one of the best ways to grow your wealth, and one of the most lucrative investment strategies is investing in rental properties. However, while owning a rental property is a great way to earn extra income, being a landlord comes with its challenges.
The stress of being a landlord can be overwhelming if you have never owned a rental property before. Being a DIY landlord involves many responsibilities. As a new landlord, it’s important to create useful habits that can help you with your venture.
The tips included in this blog can help you with your rental property business, as well as build habits that can make you a successful landlord.
Set a Budget for Renovation and Stick to It
Before you rent out your property, you must ensure it’s ready for occupancy. Often, you will need to renovate or improve the property so you can compete in the market. Home renovations and improvements are necessary if you want to increase the value of your investment asset and attract quality tenants.
However, many new property owners make the mistake of over-investing in their renovations. To meet your financial goals, it’s crucial to set a budget for renovations and stick to it. Only renovate what is needed, and make improvements that can add value to your property.
An example of a renovation to consider is changing your carpeted floors into hardwood. Hardwood flooring is easier to clean and maintain. It’s also durable and won’t get stained or damaged easily. Investing in hardwood floors can be a big selling point, and you can justify a higher rental rate too.
Know the Landlord-Tenant Law in Your Area
You have to understand that there are legal rules involved with operating a rental business. Here are a few things that you should find out:
- Security deposit: Find out what is the maximum limit of security deposit you can charge is. Also, learn the allowable deductions and when you should return the security deposit after the tenant moves out.
- Lease termination: In some cases, tenants may be allowed to terminate the lease before the term ends without penalty. Find out the permitted reasons for early termination.
- Landlord responsibilities: Landlords are expected to provide a habitable dwelling place. To do this, landlords should address repairs within a reasonable timeframe and keep up with routine inspections.
- Eviction: Landlords have the right to evict tenants who violate the terms of the lease agreement. Find out the legal grounds for eviction and the right procedure for this.
- Fair Housing Act: This law prohibits landlords from discriminating against tenants on the basis of color, race, nationality, sex, religion, family status, and disability. Learn whether your local jurisdiction has additional protections for classes not mentioned.
Get Your Property Insured
Your rental property is not just your business—it’s your investment. You have to protect it by getting the right insurance. Aside from a regular homeowners insurance policy, you also need a landlord’s insurance to protect against damages, lost rental income, and liability. It’s also best to advise tenants to get renter’s insurance so their personal belongings are also protected.
Screen Tenants Thoroughly
Tenants are your customers, and they will be the major source of your income. That being said, you should not say yes to the first person who wants to rent your property. If you end up with a bad tenant, you’ll not only experience a high amount of stress but possibly monetary losses too.
Screening tenants properly before allowing them to sign a lease is crucial if you don’t want to deal with problematic renters. Check their past tenancies, as well as their financial capabilities, general background, and credit history.
Take Before and After Photos
Before you let a tenant move in, make sure to take photos of your rental property with detailed descriptions of its condition. Give a copy to your tenants so they can have a reference when maintaining and cleaning the property.
At the end of tenancy, take photos of how the property. Any damage that is not part of normal wear and tear should be covered by the tenant’s security deposit. Having photos can help you with any complaints from tenants who refuse to pay for the damages they may have caused.
Prepare for Vacancies
You will experience vacancies from time to time. That is a normal part of owning a rental unit. When your rental is vacant, you won’t generate cash flows that can help you pay for your expenses. Make sure to prepare for vacancies and have available cash to cover the mortgage and other expenses that you need to pay, including insurance and taxes.
You also want to establish a solid marketing plan to reduce vacancy periods and spread the word about your available units.
Consider Hiring a Property Manager
As a first-time landlord, getting started with all these tasks can get too overwhelming. In fact, even seasoned rental property owners need help managing their rental investments. It’s recommended to work with a trusted professional property management company that is knowledgeable about the local rental market you are in.
Property managers will take care of your rentals, including marketing the property, screening tenants, responding to tenants’ requests, handling repairs and inspections, collecting rent, and preparing for taxes.
If you’re a first-time landlord, following the tips listed above can help your rental operation run more smoothly. You can also hire a property management company. Consider partnering with the team at Home Choice Property Management.
With us as your property manager, you won’t need to worry about every small detail related to your rental business because you can rest assured that we’ve it all well taken care of. Contact us today to learn about our services!