Becoming a landlord can be a wonderfully rewarding and prosperous experience, but it is not without its trials and tribulations. While you will learn so much on the job once you start searching for tenants and allowing them to move into your property, you never want to go into this new role blindly. Doing so can cost you time and money you simply cannot afford.
Instead, start by taking a look at our tips for being a landlord. These are the kind of landlord tips most current property managers wish they had known before they began their new careers.
1. Take it as seriously as you do any other job.
Being a landlord is not just a hobby. It’s an actual job that will have ups and downs, and if you are successful, it can be quite profitable. This is why it’s important to take it as seriously as you would any other career move. Do your homework. Get organized. Set aside income to invest in repairs should the need arise. Set up an office space, even if it’s just a desk in your home, where you conduct business during specific hours. Be consistent when dealing with everything from responses to repair requests to collecting late fees.
2. Keep good tenants happy.
One of the most important landlord tips is to do what you can to keep good tenants living in your properties. If you have someone who follows the rules, pays their rent on time, and doesn’t have complaints every other day, you have a good tenant. Sadly, this isn’t always the case.
Reward that good behavior by being a good landlord in return. Fix repairs quickly, be available to answer questions, and always be kind and courteous. Send them a card or a little gift for holidays or special occasions to let them know you appreciate that they live up to their end of the contract.
3. Keep good records.
Another one of the most important tips on becoming a landlord you should follow is to document everything. All leases and extensions should be official and on paper. Document all complaints, repairs, and evictions. Be sure your late fee schedule is in writing and a part of your lease. In the event of a lawsuit or a bad tenant, you have proof that you upheld your end of the deal.
4. Do not be soft on consistently late rent.
Everyone runs into a problem occasionally. Maybe a paycheck is delayed or there was a car accident on the way to the bank to make a deposit. If a good tenant makes a late payment occasionally, it’s okay to make an exception. However, if your tenants are constantly making late payments, make sure you are adhering to the fee schedule laid out in the lease. If your tenants stop paying and stop communicating with you about it, it may be time to talk about an eviction.
Remember, at the end of the day, this is a way for you to earn money. Tenants who do not pay regularly are costing you your livelihood.
5. Talk to others in the business.
The best thing you can do if you want to know how to be a good landlord is to reach out to other landlords in your community. Ask them what advice they can offer or for them to provide you with their own personal tips on becoming a landlord. Firsthand knowledge is often better than anything you can read in a book or on a website.
6. Never rent to family or friends.
Renting your investment property to a friend or relative may seem like a good idea, but it’s one of the worst things you can do. If that person turns out to be a bad tenant, you will have to have some very uncomfortable conversations. By the time the landlord-tenant relationship is over, you may either lose the family member or friend or your rental income, both of which can be avoided.
7. Screen your tenants.
One of the first steps to becoming a landlord is learning how to screen tenants. It may be tempting to hurry up and get someone living in your property, but the wrong person can wreak havoc on your investment and your bank account. Different landlords use different screening methods. Some go by credit score. Some go by income and job history. Others strictly go by previous landlord references provided by the tenants. You may also choose some combination of the three — just remember to avoid any practices that may break discrimination laws in your state.
8. Purchase insurance.
Another thing you need to do before you even begin renting out your property is to purchase insurance. Rental insurance, property liability — find out what your state and local requirements are for rental properties. If possible, consider buying more than the required amount to ensure you are covered for any circumstance.
9. Have a lawyer okay your lease.
When you draw up a lease, you may want to have a lawyer who is familiar with such documents look it over to make sure it follows all state and local laws. He or she can also tell you if it is missing anything you need to cover before you have a potential renter sign it. Holes in your lease could lead to big legal problems and lost income down the road.
10. Consider property management.
If you have done all these things, but you are still not sure that you know how to be a good landlord, consider hiring an Oakland property management firm to give you a hand. Working with a third party means you receive help with marketing, advertising, screening tenants, collecting rent, maintenance, and all of the other tasks involved with managing a property. This frees up your time while allowing you to reap the benefits of owning an investment property.