Have you recently become a landlord?
In this post, we will list tips for first-time landlords. We’ll also discuss how to keep track of income and expenses, increase rental income, and screen for qualified tenants.
- There are a wide variety of tasks and responsibilities that come with owning and operating a rental property.
- Important tips for new landlords include running a rental property like a business, thoroughly screening tenants, enforcing the terms and conditions of the lease, and performing routine property inspections.
- First-time landlords should have a system in place to track rental property income and expenses and create the record necessary for real estate investing.
12 essential tips for first-time landlords
Being a first-time landlord can be both exciting and overwhelming. While it’s important to do your research and be prepared for the challenges ahead, there are things you can do to set yourself up for success.
First, choose the right property. Look for a property in a good location and in good condition. It’s also important to screen tenants carefully. Communicate your expectations clearly from the outset and put everything in writing.
Finally, prepare for the possibility of repairs and maintenance issues. Having a good relationship with a reliable contractor is essential.
By following these tips, you’ll be on your way to becoming a successful first-time landlord.
1. Remember you’re in the real estate business
This means you need to treat your rental property like a business, which includes creating and following best practices.
These include conducting regular inspections, maintaining accurate records, setting clear expectations with tenants, and screening potential tenants carefully.
Additionally, prepare for worst-case scenarios. Have a contingency fund set aside in case of emergency repairs or vacancies.
2. Research state or local landlord-tenant laws
Landlord-tenant laws regulate the renting of property. These laws cover a wide range of topics, including security deposits, rent increases, lease renewals, and evictions.
Familiarize yourself with the landlord-tenant laws of your jurisdiction, as they can significantly impact your business. Find information on landlord-tenant laws by searching online, contacting your local housing authority, and speaking with an attorney or a good local property manager. The legal resource website Nolo.com also maintains a list of state landlord-tenant laws.Local ordinances may apply to your rental property, so research state and local laws before making changes to your lease agreement.
3. Set the right monthly rent price
This can be a daunting task for first-time landlords. After all, a lot is riding on getting it right. The amount of rent you charge will affect your cash flow and your return on investment (ROI), sodo your research and set a fair price.
Look at comparable properties in the area. What are other landlords charging? Use online tools to get a more accurate estimate of your property’s fair market rent, such as Rentometer, or Zillow Rent Zestimate.
Once you have a good idea of the going rate, you can make adjustments based on your unique circumstances. For example, if your property is in a desirable location, you may be able to charge a bit more than the average rent price.
Ultimately, the goal is to strike a balance between pricing your property competitively and making a profit.
4. Screen tenants carefully and run credit and background checks
Screen tenants carefully to protect your investment and minimize the risk of problems down the road:
- Run a credit check to ensure that the tenant is financially responsible.
- Request references from previous landlords and employers.
- Conduct a background check to look for issues, such as a history of eviction or criminal activity.
Look for red flags that may indicate a problem tenant. For example, late rental payments or a history of evictions should be cause for concern.
5. Get landlord insurance to protect your property
Homeowners insurance doesn’t cover rental properties, nor will it give you the same level of protection as landlord insurance.
Landlord insurance covers damage to your property from perils like fire, smoke, wind, hail, and theft. It also covers your personal liability if a tenant is injured on your property or if they sue you. In addition, landlord insurance can help to cover lost rent if your property is damaged and needs to be repaired.
Get quotes from different insurers and compare coverage options before you decide on a policy. Insurance providers for real estate investors, such as Obie, offer landlord insurance quotes online in minutes.
6. Require renters insurance
It is crucial to protect your investment and ensure that your property is well maintained. One way to do this is to require tenants to have renters insurance, where permissible.
Renters insurance is a type of insurance policy that helps to protect tenants from financial losses due to damage or theft. It can also provide liability coverage if someone is injured on the property.
There are 2 types of coverage available: personal property coverage and liability coverage. Personal property coverage protects the tenant’s belongings, and liability coverage provides protection if the tenant is sued for damages. Many landlords require tenants to have both types.
To learn if it is legal to require tenants to have renters insurance, you should consult your landlord-tenant laws.
7. Make sure you have a lease agreement in place and that both parties sign it
A lease agreement outlines the terms and conditions of the rental arrangement and can prevent disagreements.
A typical residential lease agreement includes items such as the length of the tenancy, the rent amount, late payment fees, rules regarding pets, and utility responsibilities. It is vital to understand these terms clearly before signing the lease.
A well-drafted lease agreement can provide peace of mind and help landlords avoid potential legal problems. For new tenants, a lease agreement can provide security and clarity about rights and responsibilities.
Once you have found an appropriate agreement, both you and your tenant should sign it before occupancy begins. The best way to find a lease agreement is to search online or consult with an attorney or local property management company.
8. Inspect the property before and after each tenant moves out
This can ensure that the property is in good condition and that any damage is promptly repaired.
Keep these best practices in mind when performing the move-in and move-out inspections:
- Take photos or videos of the property before the tenant moves in. This will provide a baseline for comparison later on.
- Schedule the inspection for a time when the tenant is not at home. This will allow you to more easily identify damage or changes that have been made to the property.
- Document damage, including photos or videos if possible.
9. Prepare to handle repairs and maintenance issues yourself or hire a professional
Being a landlord involves more than just collecting rent each month. You are also responsible for ensuring that your rental property is well maintained and in good repair. Unfortunately, things will break down or need to be updated from time to time.
Some common rental property maintenance repairs include fixing leaks, unclogging toilets, patching holes in walls, and replacing light fixtures.
While it is possible to do many of these repairs yourself, it may be worth your while to hire a handyperson or other professional for more complex jobs or a local property manager to manage the tenants and property. This can save you time and hassle and ensure that the job is done correctly.
When searching for a reliable professional, get references and compare rates before making a final decision.
10. Require a security deposit to cover tenant damage
As a landlord, you want your tenants to take good care of your property. But even the most responsible tenants can accidentally cause damage. A security deposit can help to cover the cost of repairs, making it easier to keep your rental unit in good condition.
When collecting a security deposit, clearly state the deposit amount in the lease agreement. Keep the deposit in a separate account so it is not mixed with your other funds. Document any damages present at move-out so you can deduct them from the deposit at the end of the lease.
There are also laws governing how much can be charged for a security deposit and what a landlord can use it for. Laws vary from state to state and sometimes by cities located within the same state.
11. Evict tenants who are not following the terms of their lease agreement
As a landlord, it is your responsibility to ensure that your tenants follow their lease agreement terms. Common lease violations that can lead to an eviction include failing to pay rent, causing damage to the property, and creating a nuisance.
If you have a tenant who is not following the terms of their lease agreement, you should first consider alternatives to eviction. For example, you may be able to work out a payment plan with the tenant or give them a warning. If the tenant continues to violate the terms of their lease agreement, you can begin the eviction process.
The first step is to give the tenant a notice of eviction. This notice should state the reason for the eviction and provide the tenant with a certain amount of time to remedy the situation. If the tenant does not remedy the situation, you can file for an eviction with your local court. Once you have been granted an eviction, you will need to have the sheriff’s department assist you in removing the tenant from the property.
Evicting a tenant is the last resort, but it is vital to protect your property and your rights as a landlord.
12. Keep records of all payments and repairs made to the property
Not only do you have to maintain the property and handle repairs, but you also need to keep track of your income and expenses.
Having a record to document payments and repairs is important for many reasons. First, it can help you keep tabs on how much money you’re bringing in each month. Second, it can track expenses related to the property, such as repairs, renovations, and utilities. Finally, having accurate records can help you at tax time.
Some landlords use a physical ledger to track income and expenses, while others use spreadsheets. An even easier way to keep track of all your rental property bookkeeping is with a free tool like Stessa, a Roofstock company.
No matter which method you choose, remain consistent and accurate and select an option that creates a record.
There are many things to keep in mind when becoming a landlord for the first time. By following these tips, you can help make the process easier and protect your investment.
Remember to collect a security deposit from your tenants, document damages at move-out, and evict tenants who do not follow their lease agreement terms. Keep accurate records of all payments and repairs made to the property, and you will be on your way to being a successful landlord.