5 tips for better success as a landlord
The lure of passive income from tenants encourages many people to become landlords. Having success as a landlord is not as easy as it sounds, however. There is a long list of issues that can crop up, from non-paying tenants to damages to your property.
If you decide to become a landlord, here are 5 tips that can help you keep your sanity, and enjoy a better chance of success:
1. Run a background/credit check
Difficult tenants can cause never-ending problems for a landlord. Before you accept a tenant, do a background check. Ask for references, and then follow up. A former landlord can give you a great deal of valuable information about prospective tenants.
It’s also possible to run a credit check. Request permission to check the credit of potential tenants. Poor credit can be a red flag that you might have trouble receiving the rent on time. A basic background check can also provide insight into what to expect. If your research indicates that you could face problems, it might be in your best interest to pass on the tenant.
2. Create a contract
Before you proceed, create a contract with your tenants. Spell out the terms of the agreement, including any restrictions on guests and pets. Your tenants should know exactly what is expected of them, and it protects you down the road. Make sure all of the terms are clear. There are a number of web sites that can help you create a rental contract with the help of templates.
3. Obtain landlords insurance
One of the best things you can do to protect yourself and your assets is to purchase landlords insurance. These insurance policies can help you protect yourself against damaged property, as well as liability for activities that take place on your premises. If you want to avoid serious losses, insurance can help you. Don’t start renting out your property without this vital piece of the puzzle.
4. Vet managers carefully
A busy landlord can benefit from employing property managers to take care of basic issues and ensure that everything runs smoothly. A good property manager collects rent, arranges for repairs in a timely fashion, and generally looks after your interests. The right property manager is a huge help to a landlord – especially one that owns multiple properties.
Before you hand over so much responsibility, vet your property managers carefully. Run background checks, and interview references. And, once you have a property manager, make sure you pay him or her fairly.
5. Understand the laws in your locality
Do you understand the laws in your locality? Make sure you know what is expected of a landlord in your area. Different cities have varying ordinances related to rental properties, and you want to make sure that you are following the law.
Also, make sure you aren’t discriminating against tenants in a way that is against the law. Treat your tenants fairly, and pay attention to providing a clean and secure environment, and you will have fewer complaints – and less chance of a lawsuit.
A little investigation into the local laws can go a long way toward making sure that you accord your tenants their proper rights, as well as help you avoid running afoul of law enforcement in other ways.
Being a landlord isn’t always easy. It requires careful thought and planning. Take the time to review your situation, and make an effort to implement best practices. You and your tenants will all be much happier.