Do you dream about having a $9.4 million investment property portfolio? This is what Sahil Mehta owns along with his brother – and he’s just 25 years old!
But if you’re keen to know how to become a landlord, you’ve got to realize that it’s not all plain sailing. Being a landlord is a big responsibility and you need to meet your legal requirements. But there are landlord tips that can help this become a passive income rather than a full-time job.
Let’s explore five tips for new landlords that can set you up for success.
1. Do Your Homework
Lots of investors focus their attention on researching the market and buying the right property. But as a landlord, you need to be aware of your legal obligations before you start renting your property to tenants.
This includes:
- Making sure your property meets local laws
- Checking it is habitable – everything is safe and in good working order
- Ensuring there are no pest issues
- Knowing your maintenance responsibilities
- Having the right insurances, such as home and liability insurance
- Setting the correct level of rent
This is just a sample of the many things you need to consider before your first tenant moves in. Need a little landlord help? Consider hiring a property management company, like Nomadicrealestate.com.
They handle everything from marketing to tenant screening and rent collection. They will make sure that you are complying with all your legal obligations.
2. Find the Right Tenants
All types of landlords want tenants that will pay and stay.
The process starts with advertising. You can use a variety of online listings or a property manager can take care of this for you. Every potential tenant will need to complete a residential rental application.
You can set the questions but you can never discriminate. This is against the law.
Criminal background is not a protected class, like race or religion. But check local laws before turning someone down based on their criminal record.
3. Have a Contingency
Becoming a landlord often means big expenses. When the HVAC system needs to be replaced or the toilet breaks, you need to pay out for the repairs. That’s why every landlord needs to have a contingency fund.
This should be in place before the tenant moves in. Keep topping it up as time goes on so when the big repair bill comes, you’re ready.
4. Do a Walkthrough With Your Tenant
If tenant/landlord relations begin to sour, it’s good to have evidence on your side.
The purpose of the walkthrough is to agree on the state of the property with the tenant on move-in day. Take lots of photos to get evidence of any issues. This will avoid complications proving responsibility for repairs at a later date.
5. Have a Clear Rental Agreement
The rental agreement is crucial.
Both landlord and tenant should understand their responsibilities. This needs to include who pays for utilities (usually the tenant). It will also outline procedures for eviction or termination of tenancy by either party.
Remember These Essential Tips for New Landlords
Being a landlord can be an exciting and rewarding journey. These tips for new landlords can help you to avoid disputes, avoid getting bogged down with debt and help you find the right tenants.
If it all seems like a lot of hard work, hiring a property management company could be a great solution.
For more helpful articles, check out our Real Estate section today!