When you become a landlord for the first time, whether because you have bought an investment property or because you have to rent out your personal home for some reason, the whole process can be rather daunting.
There are lots of stories, after all, of tenants from hell, damaged properties and lost money that can make being a landlord seem a very hard job. Plus, when you take a look online at the number of properties to rent, whether checking out Omaha apartments, Texas houses or L.A. studios, you’ll see that there is always plenty of competition for your property.
However, as long as you’re proactive and follow some key tips on being smart in the way you handle renting out your property, you will give yourself the best possible chance of success in finding the right tenant and reducing the risks of damage or non-payment significantly. Read on for some ways you can move forward effectively today.
Think Like a Business Person
One of the most important steps is to think like a business person in your investment property transactions. That is, rather than handling things emotionally or being laissez-faire, you want to be objective and look for ways to cover yourself and your interests, while earning as much income as possible.
For example, be wary of renting out your property to people you already know, such as family members, friends or colleagues. If you do lease the property to a contact, it can be hard to be strict with them if they end up being late with their payments or cause damage to the property.
To maximize your income, expect on-time payments and chase up late ones rather than letting them just slide. Protect yourself by taking necessary measures to get properly compensated or to evict tenants if they continually get behind or just don’t pay.
It’s wise, too, to create a separate bank account for all your investment property transactions. This way, any money coming in or going out related to the home will be separate from your personal finances. This makes tax time and other financial steps simpler and easier. Also, keep receipts for all costs associated with your property, so you can claim them on taxes. Think in a business-like way by considering insurance and the safety and upkeep of the property, too.
Seek Advice From Professionals
To be smart when it comes to renting out your property, seek advice from professionals such as accountants and lawyers. Accountants, for instance, can help you by recommending the best way to structure the ownership of your property. Then, they can advise you on what you can and can’t claim on tax and other income and expense-based matters.
Lawyers should be consulted too, as they can protect your interests in numerous ways. For example, they can look over the contract for the property when you buy it and that of any mortgage associated with it, and they will peruse a real estate management contract if you decide to hire a property manager. Lawyers are also good to have on hand to keep you up to date on your rights and responsibilities as a landlord.
Find the Right Property Manager
While some property owners decide to look after the renting and management of their home themselves, particularly if they live close by the property, most people end up hiring a manager from a real estate firm to handle things on their behalf.
This is usually wise because the job takes up a lot of time throughout the year (if it’s done correctly), and people who specialize in it are more aware of the right way to go about the various rental elements, such as advertising vacancies, finding tenants, creating leases, conducting inspections, getting repairs and maintenance sorted and so on.
If you want to take some of the stress off yourself and free up time, make sure you find the right property manager for your needs. Research the various options in your property’s city carefully, and check reviews and testimonials about the agency or specific agent to be sure they have a good reputation and won’t be likely to drop the ball.
Ask lots of questions of those you have on your shortlist – about their experience, communication style and, in particular, fees. Try to find out any potential extra charges you could be hit with. Always get everything you agree upon in writing in a signed contract, so you’re covered if things go pear-shaped.