The life of a landlord isn’t easy, especially if it’s your first time. From screening tenants, creating a rental agreement, and collecting rent, we’re here to give you an overview of what you need to know about your tasks. Take the advice of our professional property management firm to ensure that you don’t make mistakes, so your rental property offers the desired results.
Manage your property properly with these must-know tips and tricks:
#1 Consider it as a business
Even if you’re a salaryman on the side, you should treat your real estate investment as a business. In other words, you should do what a property management company would do. By doing so, you’ll be able to force yourself to put in the effort since it’s not only a hobby but a business.
And as a true businessman, you need to follow federal, state, and local laws. You must comply with these laws to ensure that your rental doesn’t get a bad reputation and that you don’t get in legal trouble. Be cautious when treading on laws, as real estate investments tend to come with more restrictions than other types of investments.
In addition, don’t forget to protect yourself in case of potential accidents. Get landlord insurance to protect you when your tenant files a lawsuit against you, as standard homeowners insurance isn’t sufficient.
Furthermore, if you want to be a true businessman, you need to be professional at all times. When interacting with tenants, contractors, etc., remember to be cordial. Do not brush off your tenant’s concerns – instead, offer viable solutions and follow-up to ensure that everything is alright.
#2 Conduct a background check on potential tenants
Running a background check on potential tenants is non-negotiable. Make sure to find responsible tenants because they can make or break your business. Although a tenant screening won’t guarantee that you’ll get good tenants, it lowers the risk of renting out your unit to reckless ones.
Run a background check or work with a company that can do it for you. A South Florida property management company can help weed out tenants that don’t meet certain criteria. They will find out their criminal history, rental history, etc., and confirm if the information on their rental application is true. Their task is to look out for the red flags or signs that the tenant isn’t as good as you think.
#3 Get the rent price right
It can be tempting to set any rent amount, but are you 100% sure that it’s the right rate? First-time landlords tend to be unreasonable with their rent because they don’t know that they should conduct a real estate market analysis. It compares the property to similar properties in the area in order to determine the appropriate price. It also contemplates the associated costs including insurance costs, property management costs, HOA dues, and much more.
If you fail to set a fair rate, no one will want to rent your unit. In turn, you won’t be able to generate a good cash flow, which is what you will need to purchase more properties. Likewise, if your rate is too low, you won’t be able to profit off your property.
#4 Demand that tenants submit a rental application
Be careful of renting out your unit if your potential tenant has not yet submitted their rental application. It’s easy to lie in person, but if it’s on paper, you can take the time to double-check their information. With that said, never allow a tenant to move into your property without proper documentation.
The rental application should answer the basic “Ws” of tenant screening, such as:
- Who is the tenant?
- Where is the tenant from?
- What does the tenant do for a living?
- What is the reason for the tenant’s move?
- Where did the tenant previously live?
This will give you a general idea of who you’re dealing with, and whether or not they’re worth renting out the unit to. Keep in mind that all tenants come with risks – your task is to determine which one has the lowest risk.
#5 Encourage your tenants to get renters insurance
In case things go south, you’ll be protected by your insurance, but your tenants won’t be. Consider encouraging your tenants to get renters insurance to protect their personal property in case of an accident. Renters insurance also protects your tenants in case another person is accidentally hurt on their property.
Keep in mind that asking your tenants to get renter’s insurance can’t be a mandatory clause in certain states. It would be worthwhile to consult with a property manager to ensure that it’s allowed by state law.
#6 Draft a fool-proof lease
A lease agreement is a legal document. What is not written there can’t be enforced, so be sure to draft a fool-proof lease to protect yourself and your property in case of tenant-related disputes. Keep in mind that you can’t make things up as you go – treat your lease agreement as a guidebook for you and your tenant.
The rental contract should address concerns such as:
- Outdoor maintenance. Who is responsible for mowing the lawn, trimming the trees, and more?
- Home improvements. Are tenants allowed to alter the property, such as repainting the walls? If they’re not allowed, what will happen if they do it, anyway?
- Are tenants allowed to own pets? If so, what are the allowable breeds? In a multi-unit property, are there rules that pet owners must follow?
- Who is responsible for pest control in a rental property? Can the tenant take it upon themselves to take care of the matter?
- Subletting. Can tenants sublet the unit? If so, do they first need to get the landlord’s go signal?
There are other terms that you can include in the lease agreement, but in general, it should address what the property owner (you) and the tenant can and can’t do. The law also requires you to write the consequences in the lease agreement, such as fees for late rent payments, and evictions for severe violations.
#7 Hire a property manager
Finally, hire a property manager.
A property manager can help you save time (and money) especially if you’re a first-time real estate investor. They’ve been in the industry longer than you have, so they can provide services that you’d still have to figure out. By hiring a property manager, you’ll be able to have peace of mind that your property is being managed by a pro.
As an expert property management company, Luxury Property Care has served real estate investors in South Florida for over fifteen years. Our services can be tailored according to your property’s needs and your investment goals.