Being a landlord can be a rewarding experience, but it also comes with its own set of challenges. To be successful, it’s important to avoid common mistakes and follow best practices. Here are 10 tips to help you become a better landlord.
Before accepting rental applications, it’s crucial to understand fair housing and anti-discrimination laws. These laws ensure equal access to housing, and it’s illegal to discriminate against renters based on their race, color, religion, national origin, sex, familial status, or disability. Many local and state governments have additional protections, so make sure to familiarize yourself with them. A good rule of thumb is to focus on the property and amenities in your advertising and conversations, rather than on who you think the ideal tenant would be or features geared toward a specific group. Treat and communicate with every applicant and renter in the same way.
The three most important words in real estate are “location, location, location.” As a landlord, it’s essential to find a rental in a desirable area that can attract potential tenants. Don’t just go for the cheapest property available; get to know the neighborhood, including access to transportation, grocery stores, area features, and businesses. Research the local market, taxes, and rent prices, all of which affect the potential return on investment for your property and help you predict your monthly rental income.
Advertising your rental property may not be as exciting as advertising a hot new car, but it’s just as important. Feature high-quality photos of your rental, and consider hiring a professional photographer to take them during the spring and summer months when your property looks its best. Write a clear, accurate, and error-free description of the property and its amenities.
While speed is important in filling your vacancy, you still want to end up with a qualified renter. Create a documented process and criteria for finding, screening, and securing your tenants. Ask each potential renter to fill out an application, and verify their employment and residence history. It’s also a good idea to perform a tenant background check and run a tenant credit report.
A lease serves as a binding, legal agreement between you and the tenant, so it’s essential to make sure it thoroughly addresses the rules, policies, and conflict resolution procedures for living at your property. Clearly define tenant and landlord responsibilities, and put everything down in writing. A handshake or verbal agreement won’t hold up in court. Review the lease requirements specific to your state or municipality and incorporate them into your rental agreement. Have it examined by a legal professional to ensure that the terms protect your interests and comply with local and state regulations.
Securing a tenant for your property is a significant milestone, but your work is not done. As a landlord, it’s your job to meet your terms of the lease agreement: Check in with your tenants, stay aware of the condition of the property, complete regular preventative maintenance and seasonal maintenance, and respond quickly to requests. Make sure your property is a healthy and safe place to live, and keep up on your taxes and financial reporting. Neglecting your tenants and your property may result in higher turnover, more vacancies, less rental income, or even lawsuits.
Be prepared for the possibility that your property won’t always be occupied. If you aren’t able to fill a vacancy right away, do you have enough cash set aside to pay for the mortgage, utilities, and other maintenance costs? Maintaining a rental property comes with unforeseen expenses, such as damages and unexpected repairs, and the bills.
Maintaining your rental property is crucial to keeping your tenants happy and preserving the value of your investment. Neglecting maintenance and repairs can lead to bigger problems down the line, such as costly repairs or even legal issues. Stay on top of regular maintenance tasks, such as changing air filters and cleaning gutters, and address repairs promptly. It’s also a good idea to have a maintenance plan in place, whether you handle repairs yourself or hire a professional.
No matter how well you maintain your rental property, emergencies can happen. Be prepared by having a plan in place for dealing with emergencies, such as a burst pipe or a power outage. Make sure your tenants know what to do in case of an emergency and have contact information for a reliable contractor or repair service that can respond quickly. It’s also a good idea to have insurance coverage that can help cover costs associated with emergency repairs.
Clear communication is key to a successful landlord-tenant relationship. Make sure you’re responsive to your tenants’ questions and concerns, and keep them informed about any changes that may affect them, such as rent increases or planned maintenance. Use a variety of communication methods, such as email, phone, or text, and make sure you’re available to your tenants when they need you. Effective communication can help build trust and lead to a more positive renting experience for both you and your tenants.
By avoiding these common mistakes and following these tips, you can become a successful landlord and enjoy the benefits of rental property ownership. Remember to treat your rental property as a business, stay organized, and prioritize the needs of your tenants. With the right approach, you can build a profitable and rewarding rental property portfolio.