Becoming a landlord is no small undertaking, as you probably already realize. The payoff, however, can be great, since tenants often completely cover the cost of the property mortgage and may even help you make a profit every month. If you’re a first-time landlord, here are a few tips to help you get started.
State Laws
- Each state has laws that dictate what makes an apartment or home legal to be rented. Don’t assume that just because someone will pay to live in the shed in your backyard that you’re legally allowed to rent it! Make sure the place is inspected and you’re given the green light to rent.
- No matter where you live, your apartment has to be safe for it to be legal. Make sure units are separated with fire-rated doors and work with licensed contractors to ensure that work gets done properly.
- You legally can’t be biased toward renters based on factors like race, disability, and gender, so make sure you don’t advertise your apartment this way!
The Lease
- Never rent to someone who won’t sign a lease. This contract protects both parties, and it’s a good indication that you’ll have problems collecting rent if they aren’t willing to sign a lease.
- When you sign the lease, you should also collect a deposit, which can be used to pay for damages or unpaid rent with the tenants move out. By law, you have to keep the deposit in a separate bank account and give proof of damages if you keep any of it.
- When you write the lease, include a clause that requires your tenant to carry their own rental insurance even if it isn’t legally required in your state. That way you don’t get into a messy battle over liability if a tenant’s possessions are ruined in a natural disaster or a guest is hurt while in your rental.
- Make sure to specify who will take care of exterior maintenance. While it is a given that tenants will clean their own house, it needs to be clear who is responsible for snow removal, mowing the lawn, and other yard work. If you do it, you can charge more for rent, but you have to be diligent about maintaining the grounds.
Dealing with Repairs
- When you have tenants, you’re going to have to do repairs, so make sure you budget for this. Repairs that you need to make due to normal wear and tear can’t come out of the tenant’s deposit.
- It pays to find a good fix-it man (or woman) to have on call if you aren’t handy yourself. If a tenant’s problems aren’t fixed quickly, they could withhold rent, and if the problems are bad enough, they can justifiably break the lease and you might even have to pay hotel/moving expenses.
Finding the Perfect Fit
- The tenant that’s the right fit for you will have all his/her ducks in a row. Look for someone who has a steady job and seems to have a stable life. When they come to view the apartment, they should bring important documents with them. If you have to chase after a potential tenant for references or credit information, it probably means you’ll have to chase after them for rent money as well.
- Don’t rent to the first person who views you place. Try to show the apartment or house to as many people as possible over the course of the week and collect several applications.
- Be upfront about your place and what you’re looking for in your ad. For example, if you want don’t want to allow pets, specify that! The more vague you are, the more varied your applicants are going to be, and that could lead to finding only poor fits for your rental.
This guest post is from Allison with RentersInsurance.com, where you can go to find great information about renters insurance to pass on to your new tenants.
