If you’ve decided to invest in a Florida rental property, protecting your real estate asset should be your first and foremost priority. Just like any kind of investment, investing in real estate comes with pros and cons. The good news, though, is that the risks can be easily mitigated by adopting the proper strategies.
By taking certain precautions, you can secure your real estate investment and ensure that you have a reliable source of passive income. Follow the tips below so that you can protect yourself – and your rental property – from damage, lawsuits, and many more, especially if you’re a first-time landlord.
#1 Get a Landlord Insurance Policy
A common question that property owners have is, “Won’t my homeowners’ insurance cover my rental?” It is important to note that a homeowners’ insurance policy typically applies to an owner-occupied home, and not a residential rental property.
On the other hand, landlord insurance coverage will protect you from incidents that occur on your rental property such as break-ins, damage due to extreme weather, and so on. Your landlord insurance should also include liability coverage. This will cover the medical expenses should you be found responsible for a tenant’s injuries on your rental property.
Before getting an insurance policy, be sure to thoroughly read the terms and conditions. You don’t want to be underinsured, but you don’t want to be over-insured, either.
#2 Require Tenants to Pay a Security Deposit
The security deposit protects your property in the event that a tenant breaches their lease agreement. For instance, if a tenant moves out without notice, leaving the rental unit in poor condition, you will not be at a complete loss. Their security deposit can be used to cover the costs of repairs as well as offset any unpaid rent.
Typically, the security deposit is collected during the start of the tenancy. This fee is completely refundable and should be returned to the tenant at the end of their tenancy, provided that they did not violate the terms of their lease.
The standard amount depends on the value of the property, but most landlords charge one month’s worth of rent. Ask your property manager about your state’s laws governing the maximum amount that can be charged.
#3 Run Background Checks on Every Prospective Tenant
The biggest mistake that you can make as a landlord is not screening your prospective tenants. While you aren’t required to know everything about them, it pays to run thorough background checks on every person who applies to rent your Florida residential property. Screening tenants is a step that you cannot skip — if you do, you may end up with bad tenants who will treat your property poorly.
Here’s what you should do:
- Check their credit score using Equifax
- Get in touch with their past landlord (if any) to get an idea of how punctual they are with rent payments, whether they get along with neighbors, etc.
- Do country-wide research on their criminal record
- Contact their employer to verify their source of income, as well as its reliability
There are other steps that you can take, but it depends on how thorough you want to be. Generally, the more steps you take, the better.
You might also want to consider hiring a professional property management company to handle the tenant screening process on your behalf.
#4 Conduct Frequent Property Inspections
After your tenants have moved in, make sure to conduct regular inspections of the property. This allows you to monitor the condition of the rental home, as well as ensure that your tenants are standing by the terms of their lease.
For instance, if your lease agreement explicitly states that bringing pets (except service and emotional support animals) into the home is prohibited, carrying out an inspection will allow you to check whether or not your tenants are hiding animals inside the home.
Conducting regular inspections also lets you identify issues, such as water damage, broken faucets, and other common rental property repairs, that should be fixed immediately.
#5 Proactively Prepare for Natural Disasters
Natural disasters such as earthquakes, hurricanes, tornados, wildfires, etc. can strike without warning. During these unexpected situations, there’s very little that you can do. However, there are plenty of steps that you can take to minimize the impacts of these disasters before they occur. Here’s how you can protect your property from the force of nature:
- Create an evacuation plan for your tenants. Make sure that they understand exactly what to do and where to go in case of emergency.
- Provide your tenants with radios, flashlights, generators, first aid kits, etc. to keep them safe while waiting for further instructions.
- Make sure that your rental property has at least one fire extinguisher.
- Replace the batteries on smoke detectors frequently.
Aside from protecting the rental property, it is essential that you protect your files, as well. Back up all of your important files, such as rental contacts, invoices, receipts, etc. on a hard drive or property management software.
#6 Hire a Property Management Company
The best way to protect your Florida real estate investment is to hire a property management company. Certain tasks may be too overwhelming and complex for a landlord to handle by himself or herself.
For instance, not all landlords are familiar with Fair Housing Laws and the Landlord-Tenant Act. Managing a rental property by yourself, without a comprehensive understanding of these regulations, may put your property at permanent risk.
By hiring a property manager, you’re giving your rental property the best chance at succeeding in an already competitive market. You’ll be guided by a team of professionals who have years of industry experience. This means that they know exactly how to manage your property.
There are plenty of ways for you to protect your property investment, but the best way would be to leave it in the capable hands of a property manager. At Luxury Property Care, we employ highly skilled property managers who boast an impressive portfolio that includes a variety of properties, from single-family homes to luxurious villas. We can confidently protect your real estate assets, saving you from the headaches of property management.