If you’ve never been a landlord before, it can be an exciting and scary step. Owning and renting property is a great way to earn a (relatively) passive income, as in an ideal world, the renter essentially pays any mortgage you owe, as well as a little extra. In return, you provide a home, and you maintain the home.
But there are a lot of ways to get things wrong as a landlord. This can ruin your relationship with your tenants, potentially threaten your income, and even get you on the wrong side of the law. So, if you’ve got a property ready to rent, here’s how to prepare it for your first tenants and manage them well.
A Suitable Rental Property
The first step is finding the ideal rental property. If you already own property that you’re planning on renting out, you might need to renovate it to make it more suitable for renting. You need to consider a few factors, with tenant safety being first and foremost.
Rental properties need to be considered habitable and safe. Slum lords are, or at least they should be, a thing of the past. This includes working heating, electricity, running water, and meeting fire and gas safety requirements.
You also want to make the property more profitable and more appealing. Basic renovations like repainting the walls and repairing any minor issues can help with this. If the property is large, you could split it up and rent to multiple tenants, but this could mean more work if you plan on converting a house into separate apartments.
Setting Rent For The Property
Next, you want to set the right rent. You should find a balance between making a profit and covering the expenses of owning and maintaining a property. While it might be tempting to just charge as much as possible, you aren’t going to find any tenants this way.
The best way to work out the appropriate rent is to look at other rental properties in the same area. If you’re renting out a house, try to match the price of surrounding houses. Even the way you renovate the property can affect the rent, as nicer properties can be rented for more money.
Sometimes starting slightly high can be beneficial, especially in more popular areas. You can always lower the price if tenants aren’t interested. Just bear in mind that the longer the property sits empty, the more you potentially lose.
Finding Your First Tenants
Once the property is ready to rent and you have a good idea of what to rent it out for, you should put the property on the rental market. There are lots of different online marketplaces that allow you to advertise your property, so find ones that are more popular in the area and across the state or nation.
Make sure to add pictures of the property, as well as details about the property itself, the rent, and the surrounding area, to make it more appealing. Some people might want to view it in person before they start renting.
Once you have a few applicants, use a tenant screening service to make sure you find the best tenants for the property. Ideally, you want people with a decent credit history and good references.
Set Expectations Early
Once you find a tenant or narrow them down, it’s good to have a conversation with them about your expectations and what you’ll do as a landlord. This includes talking about when you want rent to be paid and how, as well as when you will be around for property inspections.
If you can get things in writing, it will be better for both parties, as you can both refer back to the document if there’s a dispute.
Understand Rights And Responsibilities
As a landlord, you need to operate within the boundaries of the local state laws. These can differ wildly, so do some research and ideally consult with an attorney to make sure your lease agreement is up to scratch.
You will also need to get rental insurance in case there is damage to your property or the tenants’ belongings.
If Your Tenant Doesn’t Pay
Late rent payments can be a frustrating issue to deal with, as that rent might be needed to pay your bills. If the tenant is late or doesn’t pay at all, it can have a cumulative effect on your life and bills. So, should you jump to evict?
Not necessarily. First, it’s a good idea to think about the track record of the tenant. Have they paid on time for months without a problem? Did they tell you that rent might be late this month? The fact is that things happen in people’s lives, and sometimes it’s actually more worthwhile to be lenient and give them an extra few days to pay.
This allows you to maintain good relationships with a mostly reliable tenant, and it means you don’t need to find someone else. But if someone always pays late, doesn’t pay enough, or simply doesn’t pay rent, you might decide to end the tenancy. Different states have different laws about when you can evict the tenant, so always look this up beforehand.
Dealing With Property Damage
If the property is damaged, your first responsibility is to fix it as soon as possible. Whether you discover it in an inspection or the tenant tells you, you need to make sure the property is habitable and comfortable for your tenants.
If the tenant caused the damage, and it wasn’t a case of wear and tear, the cost of repair could come out of the security deposit, or, in some cases, you may have to sue them in small claims court. However, it can be difficult to determine whether this damage was due to abuse or negligence.
You also want to check your property once your tenants leave and make potential improvements and changes. If you have a bit of downtime between tenants, this is a good way to spend it. Things like painting the exterior of your property can boost its value and potential earning potential as a rental property, but without having to put a massive amount of money or time into the property.
Property damage is one of the risks of being a landlord, which is why good tenants and regular inspections are so important.
Thanks for stopping by!
Magda
xoxo