Renting out your property can be a great way to earn extra income, but the process can be challenging for first-time landlords. Finding reliable renters and navigating local laws can be difficult. Here are 9 tips for first-time landlords to help make the process easier and ensure success:
- Find and prepare a rental property
Becoming a landlord starts with finding and preparing a rental property. You can either purchase a property on your own or seek the advice of a real estate agent. Before renting out the property, ensure that it is in good condition and has all of the necessary amenities. Conduct thorough maintenance checks on the plumbing, air vents, pipes, smoke detectors, and electricity to ensure the safety of your tenants and avoid any legal claims.
The more you invest in your property, the higher rent you can charge. Consider what features might be attractive to prospective tenants, such as a parking space or garage, and make sure the property is clean and well-maintained. If possible, invest in redecorating or refurbishing the property for higher rent payments in the long run.
- Consider your rental property as a business
Managing a rental property is a business that requires compliance with various laws at the federal, state, and local level. To avoid costly mistakes and unnecessary stress, it's important to do your research and understand your responsibilities as a landlord before getting started. Develop a strategy as if you were running a professional management company and familiarize yourself with the legal and compliance materials that apply to your rental property.
Read up on landlord and tenant rights, and check the specific requirements in your state, such as housing laws, licenses, and property inspections. Familiarize yourself with rules regarding tenant notices and security deposits. If you don't have the time or desire to manage the property yourself, consider hiring a property manager to handle tasks such as collecting rent, advertising, and finding tenants.
- Make sure to have landlord insurance
As a landlord, you are responsible for your property and it's important to protect yourself with landlord insurance. This type of insurance can cover you against legal claims or unexpected incidents such as natural disasters or burst pipes. To find affordable landlord insurance options, sign up on Luna and get a free quote today.
- Choose your tenants carefully
Finding reliable tenants is a crucial aspect of being a landlord, as it can prevent issues such as late fees or damage to the property. One way to ensure that potential tenants can be trusted is by conducting a tenant screening. This can include a background check and a written rental application.
When reviewing the application, pay attention to factors such as the tenant's ability to pay rent, their rental history, credit report, and any criminal or eviction history. Be sure to take note of any red flags and don't ignore them as they may lead to future problems.
- Have a lease agreement
Creating a detailed and well-written lease agreement is an important step in being a landlord. This document, once signed by both parties, can protect you in legal situations. Consider including the following points when drafting your lease agreement:
• How and how often rent payments will be collected
• If late payments will be charged
• The amount of the security deposit and how it will be returned to the tenant
• Pet policies
• Allowances for property alterations
• Policies on subletting
• Who will be responsible for repairs and maintenance
• Office hours when tenants can contact you
• Notice required before tenants vacate the property
Also, be sure to include any rules or regulations set by the homeowner's association, if applicable, such as quiet hours and maintenance of common areas.
- Renters insurance
As a landlord, it is important to note that landlord insurance does not cover the personal belongings of tenants. To ensure protection in case of accidents or natural disasters, tenants should purchase renters insurance, which is typically an inexpensive option. If the property is leased by roommates, each of them should have their own renters insurance policy.
- Property Maintenance
Before renting out your property, it is important to determine who will be responsible for maintenance. If the tenants will be responsible, make sure to clearly state this in the rental agreement.
Additionally, you may want to send reminders to ensure that tenants are regularly checking and maintaining important items such as smoke detectors. On the other hand, if you will be responsible for maintenance, it is important to have contact information for necessary professionals such as plumbers and locksmiths readily available in case any unexpected maintenance requests arise.