Have you ever thought about renting out your home? Most people think about this at one time or another while they consider buying a new home. When done right, being a landlord is a lucrative business that can open the doors to that house you always dreamed of. It means that you can have multiple assets that continue to appreciate in value.
Before you take the plunge, let's go through some of the things that you need to know about being a successful landlord. If you are not careful, some mistakes may come back and bite you again and again.
Tenant Screening
Not all tenants will be good tenants. All too often landlords can be too eager to fill their homes. It is important that you do a little investigation on your potential tenants. Whether you are managing your property yourself, or using an agency, careful screening will save you a lot of money and stress. There are problem tenants out there, but there are many ways to prevent them living in your property! Things you can do to make sure you have the right tenants:
References
Talk to previous landlords
Talk to the Tenant
Credit check
If you are letting an agency handle your affairs, make sure they know that you want a good tenant. Unfortunately, agencies do not always have your interests at heart. Their job is to rent out property and sometimes they forget that they have a responsibility to the landlord to find good tenants, not just any. The key here is to be on top of things. No one will care about your home or income as much as you! Note* When screening your tenants, you should be aware of the Fair Housing Act
Understanding your Expenses
Most people don't realize that expenses are more than taxes, insurance and mortgage payments. You should have money set aside for repairs, vacancies and bad debts. These other expenses can be limited with planning and preparation.
You should be realistic with the condition of your property. If something looks like it's not going to last or will require repairs in the near future, then you should sort out these issues before your tenants move it. You will find this saves you money as you have the opportunity to either fix some of the problems yourself or find a good quote for the services. Once your tenants have moved in, your priority would be to solve the problems as quickly as possible which means the costs can be increased.
Always over budget for your expenses. Things happen that you cannot always foresee. Here are a few costs you should consider when renting out your home.
Gas and electricity testing
Insurance
Letting agency fees
Tax
Repairs
Communication
Be in contact with your tenants. The best way to make sure that your tenants pay your rent and treat your home well is to be in regular contact with them. Obviously, you do not need to harass them. If you haven't heard from them in a few months, then give them a check up call. Find out if they are happy and what their plans are for the future. Often, if they feel that you are looking after their interests, then they will look after yours.
Most tenants have some sort of idea how long they want to stay in your property. A good relationship with your tenants mean that you can have an idea of their intentions and plan for it.
Home Checklist
If you have rented a home before, you would have probably come across the checklist and never thought twice about it. It is crucial to do a stock check before a tenant moves in or out. This will help tenants know exactly what condition the apartment is in so that they respect it. Obviously, there will be room for wear and tear, but if it's more than that, you will have the checklist to go back to.
The checklist will be signed by both parties and you will have proof should the condition of the apartment be disputed by the tenant when they move out. Tips for making a good checklist:
Separate your checklist into individual rooms
Break down each room into sections
Create a system of check each room. A good idea is to start from the floor, then the walls, then the ceiling.
List appliances and their condition
This will save you spending money on things which you shouldn't have to.
Insurance
There are many insurance plans for your property. Make sure that you have enough insurance to cover your home. Talk to your insurance agent to get the right package for you.
A well-designed insurance package can protect your home from losses caused by everything from fire and storms to vandalism, and personal injury and discrimination lawsuit. For a small amount of money, you can protect yourself from the opportunity to lose a large amount.
Rules for your tenants
Having a clearly defined set of rules for residents can save you time and money. When you draw up your list of rules, make sure the same rules apply to all your residents. Don't discriminate based on age or gender. For example, don't just say "children are not allowed in the pool area". You either have to say "no resident or guest is allowed in the pool area" or "children under the age of 8 must be accompanied by an adult in the pool area". Using general terms, such as "resident" and "guest" will mean that you can't be accused of discrimination.
If a resident does break your rules, then you have every right to keep a record of such behavior. Keep written records of the time and date when the incident took place and how you found out about the incident. Keeping records will mean that it's far easier to evict a residents if there are any problems in the future. Having rules and guidelines for residents clearly laid out means they know what is expected of them before they agree to rent from you. Make sure you look at the laws in your own state before you finalize your rules.
Maintenance and Repairs
Nobody likes having to spend money on repairs, but making repairs within the shortest possible time will save you money in the long-run. A small problem can soon escalate into a big problem if you don't act quickly. Think of plumbing, if there is a leak and you don't fix it quickly, you could end up with damp and other issues. Acting quickly to repair problems will mean that the rental and sales price of your home doesn't depreciate.
If you don't act quickly you could also find that good residents will want to leave. They can also sue if they suffer any injuries or leave without giving you notice. Act as soon as any issues come up so you won't be left footing the bill and trying to find new residents.
Advertising
Advertising is one of the most common ways for landlords to find people looking to rent a property. Advertising can be expensive in traditional newspapers and magazines, but there is another apartment rental service [http://rentkong.com/list_property.php] company that can help you find new residents that are much cheaper. Potential residents will also be able to see a picture of your home, so you'll spend time showing your home to people who are genuinely interested in renting from you.
When you advertise your home, make sure you describe only the facts about your home, such as, location, transport links, and what is in your home. Never discriminate on age, race or gender or say something like, "this home is perfect for young couples" as it could be misread that you are discriminating against families or older people.
Resolve disputes informally
If you have problem with residents, there is no need to be heavy-handed and start calling your lawyers immediately. Try to resolve any problems with an informal meeting first. This will help save you money on lawyers fees (they get enough money already!).
If an informal meeting doesn't work, then consider using a neutral third party to mediate between you and the residents. Only once you have exhausted all possible avenues should you get your lawyers involved.
Get everything in writing
Before you agree to anybody renting your house you must get everything in writing. Even if you plan on renting to friends you need a contract. Without one you'll have less standing in the eyes of the law. Your contract needs to include things like:
All the names of the people renting the house
Rules of when you or the renter must undertake of repairs or maintenance
How much notice you are required to give to the renters before you visit them
Deposits and fees payable
Rental amount
The length of the contract
Make sure to get these key details written down and consult further with your lawyer so you know the rights in your state.
These 10 tips will make the transition into being a successful landlord much smoother. Becoming a landlord isn't difficult as long as you are organized and have a plan in place.
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