Being a first-time landlord can be challenging, not to mention nerve-wracking. This is because there’s more to know about the business than collecting rent.
If you don’t know where to begin, we’ve prepared the following pointers to help you prepare for your new role. These tips can help you get your South Florida rental off the ground and guarantee your success in the future:
#1 Buy in the Right Market
The single most important factor in a profitable rental is the location of the property. This is because renters want to be in a neighbourhood that provides convenience and a proper way of life. This refers to a place with accessible public transit, good schools (e.g. according to rating), and more. These characteristics of rental properties can entice even the choosiest of tenants.
Furthermore, you should choose communities with plenty of employment opportunities, booming businesses, or planned developments (you can check with the city council) to ensure your property appreciates. In case you want to sell your property down the road, you can be certain that it appreciates (i.e. it boosts in value).
#2 Understand the Law on a State and Local Level
You should follow all federal, state, and local laws in order to operate a rental property without any hiccups. Real estate, particularly real estate investments, has to abide by specific rules, so be sure to do your homework and make sure you know the law – that way, you won’t get into legal trouble. This will allow you to retain a solid reputation and ensure your success as a South Florida rental property owner.
A property management company can check if your property and practices are compliant. Are you following the Fair Housing Act (FHA) during tenant screening? Does your property comply with the building code? Their role is to protect you from unlawful practices.
#3 Have a Network of Vendors on Call
Once you have tenants on your rental property, you should have a plan in place so you can deal with their concerns promptly. In the event that a tenant locks themselves out, how will you be able to assist them – even when you’re miles away from your South Florida home? This is something that long-distance landlords should consider.
Furthermore, if a tenant reports that their heater isn’t working, you’ll have a very limited amount of time to get it up and running again. Having an HVAC contractor on call is the best way to prepare for problems such as these.
The point is that problems are inevitable, so it would be in your best interests to have a network of vetted vendors at the ready. By doing so, you don’t have to waste your time looking for a vendor you can count on to get the work done.
#4 Screen Your Tenants
The main aim of tenant screening is to aid you in selecting good tenants. These are people who will take care of your property, and whom you know will treat it as if it were their own. By narrowing down your pool of potential renters from the mound of applications you get, you can be absolutely cretin that your tenants will be responsible, and won’t cause any headaches down the road..
Ideally, you should rent to tenants who can pay on time and who have previous landlords who can vouch for their character. As you screen your tenants, ensure that you comply with the FHA or partner with a property management firm that already has a fool-proof process in place.
#5 Let Your Tenants Sign a Rental Agreement
Do not agree to rent out a property to a tenant who has not signed a legal rental agreement. The rental agreement (or lease agreement) is a contract that binds you both – if one party fails to uphold their commitment, the other party can raise that matter to the courts.
The best way to communicate your expectations and protect yourself in case of lawsuits is with a written rental agreement. Although oral agreements are allowed in certain cases (generally for lease agreements that last less than a year), they are less effective than a written agreement. The reason is that it will be difficult to prove what was agreed upon without a written lease agreement.
Property management companies are trained to prepare fool-proof lease agreements with the help of a professional real estate lawyer. Consider partnering with a property management agent to guarantee legal protection in case your tenant wrongfully sues in the future.
#6 Collect Rent Through a Tenant Portal
The easier it is for your renter to pay rent, the more likely they are to make their payments on time. With a tenant portal, tenants will be able to set up payments to automatically deduct their rent from their bank. Besides, tenants want convenience. They don’t want to go to the bank to pay their rent again and again. With that said, it would benefit you to offer online rent collections for your South Florida rental property.
Online rent collection also provides transparency. You’ll know in real-time when a tenant makes a payment – and the other way around! With rental payments on the internet, you’ll never have to deal with tenants who lie that they’ve paid their rent already.
#7 Take Tenant Retention Seriously
Don’t allow your hard work to go to waste after you’ve spent so much time screening tenants, signing a rental agreement, and so on. It can be time-consuming and costly, so concentrate on retaining tenants so you don’t need to go through all of that again.
If your tenant pays their rent on time and cares properly for your property, consider an incentive that will entice renewal. When you encourage your renters to renew, you can avoid vacancies and continue to earn passive income from your South Florida rental property.
Partner With a Property Management Company
The eighth and final tip is to partner with a property management company that’s been in the business for ages. An excellent example is Luxury Property Care, a full-spectrum property management company with an expert team of lawyers, property managers, CPAs, and more. By partnering with us, you can be certain that your first time as a rental property owner will be all smooth-sailing.