Purchasing a property to let can be an excellent way to invest your money and secure an extra stream of income. Although it is not guaranteed, your property should also appreciate over time which means you could make a decent profit when you decide to sell. There are plenty of financial benefits to renting a property, but becoming a landlord is a big commitment. You must have a good understanding of what will be involved and have the time, funding, and resources to make your business a success. Here are five tips for first-time landlords:
1. Understand the legal requirements:
If you are considering renting your first property, then you must do thorough research and understand the legal requirements. You will need to ensure that your rental business complies with all local, state, and federal laws. Purchasing real estate to rent typically comes with regulations, so take the time to research what local and state laws apply beforehand. Keep in mind that mortgages for rental properties are different from standard mortgages and usually have stricter criteria. If you are taking out a mortgage to fund a property, then you should always make the lender aware that you intend to rent the property. You must also protect yourself by taking out quality landlord insurance. This policy will provide you with financial protection in the event of property damage, theft, or personal injury. Landlords also have various obligations under landlord-tenant law. For instance, you have a duty to maintain the property and keep it safe, clean, and livable. Take a look at this article thebalancesmb.com for more information on landlord obligations.
2. Write detailed property listings:
You should write detailed property listings that provide potential tenants will all the information they will need. This should include the number of rooms, amenities, rental cost, conditions of the property, and so on. Writing detailed listings will save you time and money as it means that tenants will know what to expect when they book a viewing. You must also take high-quality photographs that give a realistic view of your property. It is a good idea to list your property on multiple rental sites to increase exposure. According to Investopedia, the best rental listing sites are Zillow Rental Manager, Avail, and Apartments.com.
3. Screen potential tenants thoroughly:
Screening potential tenants is a crucial task for all landlords. A thorough screening process will help you find responsible tenants who will take good care of your property and make rent payments on time. Ideally, you should look for tenants with a positive rental background and good references from previous landlords. You can carry out a background and credit check to see whether a potential tenant is financially responsible. Advice on mysmartmove.com states that “an ideal tenant should have sufficient income to cover their rent, even if unexpected expenses arise.”
4. Hire a property management company:
Hiring a property management company can be a great option for new landlords as it removes some of the stress and hassle involved with owning a rental property. A property management company can handle various aspects of the rental process including marketing your property, screening tenants, collection payments, and property maintenance. Hiring a property management company will lower your profit margins, but it is an excellent option if you do not want to take a hands-on role or live far away from the property. You can have peace of mind knowing that your property is being maintained and managed professionally.
5. Have a written rental agreement:
Having a written rental agreement is the simplest way to protect yourself and your assets. Oral agreements may be legal in some situations, but you will have no way to prove what was agreed upon before your tenants moved in. This is why it is always best to sign a written agreement that sets out clear rental terms and expectations. The easiest way to ensure that your written rental agreement is valid and legally compliant is by having it drafted by a specialist property lawyer.
Becoming a landlord has dozens of potential benefits. You will have the opportunity to run your own business, boost your monthly income, and improve your financial position. Property is a good investment that should give you a high return in the long term. That said, becoming a landlord can be challenging, particularly when you are just starting out. You must do your research and plan carefully to make your property business a success. Use the above tips to help you become a successful landlord and maximize your return on investment.