Once you’ve decided to rent out your property, you’ll need to start looking for tenants and managing your property. Being a first-time landlord can be both exciting and difficult.
However, if you succeed as a landlord, you’ll reap the rewards of your hard work. Having a rental property will help you pay your mortgage, earn equity and increase your revenue.
Experience, as they say, is the best teacher. You’ll experience many challenges and you’ll also make some mistakes along the way. In this article, you’ll learn what you can start doing today to help you become a successful landlord.
Rent Should Be Your Priority
Because rent is your source of income, you need to make it a priority. This means you need to be aggressive in collecting rent and late fees. Otherwise, you might not receive rent for several months, which will greatly affect your earnings.
Sometimes your tenants might experience financial setbacks, which will hinder them from paying rent on time. However, your tenant needs to communicate this with you in advance. If your tenant stops paying rent for several months without proper communication, you need to start evictions.
Learn Everything About Taxes
Set a meeting with an accountant or tax planner who has experience filing landlord taxes. They will teach you how to organize your expenses and prepare yearly tax documents.
You can ask about how your rental income will affect your federal and state taxes. Your accountant can also help you compute your net rental income and determine the best rental rate.
Get a Landlord’s Insurance
To protect yourself from any risks, you can get a landlord’s insurance. Some of these risks include unpaid rental fees, property damage, legal disputes and long-term vacancy. Because home insurance only covers the property and the occupant’s possessions, it’s not enough for a rental property.
Landlord’s insurance typically includes liability and will cover medical expenses if your tenant gets hurt in the property. It can also protect items you own in the property from damage caused by hail, lightning and fire.
Present Your Property in the Best Way
It’s crucial to present your property in the best way to attract prospective tenants. If your property is well-maintained, you’ll be able to attract high-quality tenants. There are several things you can do to enhance your property’s look:
- Have it professionally cleaned
- Add a fresh coat of paint
- Install curtains in the bedrooms
- Stage it with attractive decor and furniture
- Mow the garden and add flowering plants
- Add framed images on the walls to reflect more light
Take Inventory of the Property
Do a walkthrough with your tenants before they move into your property. It’s very important to record what the property looked like before and after renting it out.
One way to do this is to take several photos of the property before the tenant moves in. You can also create a property inventory, which will be signed by both you and your tenant.
Your inventory will keep you aware of the changes or damages made by your tenants. It can serve as evidence when there is a dispute regarding property damage.
Screen Tenants Carefully
Your job as a landlord will be less stressful if you’re able to find a reliable tenant. A good tenant will pay the rent on time, take care of your property and stay long-term. On the other hand, a bad tenant will not pay rent and might even cause damage to your property.
Keep in mind that late rent will affect your revenue and evictions are very expensive. To be able to find someone good and responsible, you need to carefully screen potential tenants.
Ask prospects about themselves, their work and their reasons for moving. Require them to provide past landlord and employer references. Make time to do background checks of their credit history, eviction report and criminal records, if any.
Set Aside a Reserve Fund
One essential tip for first-time landlords is to keep a reserve fund. This fund will cover all scheduled property maintenance and repairs. It will also cover unexpected repairs, which should be done immediately.
Require a Security Deposit
Having a security deposit will help protect your rental income. When your tenant fails to pay rent or damages the property, the costs will be deducted from their security deposit.
However, laws related to security deposit vary from state to state. Make sure you take the time to study your state laws.
Be a Responsive Landlord
It’s important to keep your tenant happy and make them stay long-term. One way to do this is by being responsive to tenant requests, including maintenance and emergency repairs. Or, you may have to consider offering tenants a deal on rent or on other conditions. Flexibility is key.
To avoid tenant disputes, always make sure your tenant can easily reach you. Also, and as much as possible, respond to requests quickly.
Prepare for Seasonal Maintenance
Keeping a rental property in top condition requires a lot of time and effort. Since you can’t do all tasks on your own, you need to hire someone to do seasonal maintenance. Some examples are cleaning the property’s exterior, mowing the lawn, trimming the trees and removing snow.
Schedule Regular Inspections
Keep in mind that there are specific state regulations about rental property inspections. Make sure that your certificate of occupancy is up-to-date, and you pass regular inspections in your property.
Regular inspections will help ensure your property is habitable and safe, as well as help you avoid being fined as a landlord.
Invest in Renovations That Add Value
It’s wise not to spend money on renovations that will not produce high returns.
For example, one landlord renovated the tiles of the bathroom and added marble countertops to the kitchen. However, the rental property is not located in a classy neighborhood, so the landlord couldn’t charge a higher rent.
Make sure that the renovations that you do will lead to a higher rent or lessen your monthly expenses.
Being a landlord can be very difficult and challenging at the start. With the right attitude and preparation, however, you can learn to adapt. In time, you’ll become successful in the rental business.
If you require any property management services, contact Doug Anderson Property Management at (661) 945-5444 or message us at firstname.lastname@example.org.