There are more rental property opportunities available today than ever before. A growing number of potential homebuyers are holding off and flooding the rental market. This has created ample demand for rental properties and in turn demand for landlords. On the surface, owning a rental property might seem easy. You buy a property, find some tenants, and wait by the mailbox for rent checks. If it was only that easy, everyone would do it. Especially if you’re not educated on the process and don’t know what you are doing going into it, you can quickly get swallowed up by the process.
In GSI Home Solutions’ helpful guide, we provide six do’s and don’ts of being a landlord. With our landlording tips, you can approach managing your rental property like a professional.
Rental Property Do’s and Don’ts: 5 Landlording Moves to Avoid
Owning and operating a rental property can be an involved process, and the more complex the property is the more that might be demanded from its landlord. But by knowing which landlording mistakes to avoid, you can more easily anticipate any unforeseen circumstances with tenants or the property itself. Here are a few things to avoid when landlording your rental property.
Do not buy a rental property before you know the process
As we stated, there is more to being a landlord than collecting rent checks. Owning a rental property is very much like running a small business. You need to have a strong understanding of the building’s facilities, as well as the tenants inhabiting it. You need goals, a budget, systems, and processes. Without these in place, you will scramble around without any real direction. Start by assessing how you plan on finding tenants.
From there think about ways you will vet them to ensure you know who you are renting to. By screening your tenants you can have a firm grasp on their ability to potentially pay rent, and identify if they have any previous evictions in their past. You also need to consider your lease, rent collection, household rules, and penalties for breaking the lease. Another landlording factor to consider is how you will handle tenants moving in as well as what the end-of-lease checklist will include. Being a landlord, you will have days, even weeks, where you won’t even think about the property and other weeks you will be forced to handle three different items with it. Before getting too far, know and understand the process.
Do not rent without guidelines
There are many horror stories of a new landlord who has a mess on their hands due to renting to the first available tenant. As much as you want to fill a vacancy and get the property rented, you need to think about the big picture. How will you feel about the tenant six months from now? Along with implementing a screening process, every new tenant must be given an application with references called and employers contacted.
Many landlords go so far as a credit check or ask for pay stubs, but you need to be comfortable with who you are renting to. If the tenant stops paying, nothing else with the property really matters. Without that positive cash flow coming in from trustworthy renters, landlords will begin to lose profits and lose out on their earnings from the property.
Do not rent to friends and family first
Especially among new landlords, it might seem like renting to friends or family seems like a great idea. That is, until something bad happens, which will happen more times than not. If you run your rental like a business, that means you’ll need to implement discipline at some point or another. It’s not always good news for tenants, especially ones that have been problematic or not following lease guidelines. Any tenant should be notified of lease violations, which might be harder to do for friends and family. If they outright break the rules you must be willing to enforce the lease and enforce whatever penalties are in place.
When renting to friends or family this isn’t always the easiest thing to do. How would you react if a friend of yours damaged the property? How about if they were late on the rent? If you are not willing to have difficult conversations with them then you need to consider renting to someone else. As well-intentioned as renting to someone close to you is, there is also a real risk of uncomfortable situations and conversations that may strain your personal relationship with that person.
Rental Property Do’s and Don’ts: What to Do When Landlording
Always spend time on your lease
Most tenants, and landlords, understand the importance of a quality lease. They know if there are any questions or disputes to refer to the language of the lease. However, as obvious as this may seem there are still many landlords who fail to give the lease the attention it deserves. Instead of spending the money to have an attorney draft a personal lease, they go with a generic version online. This may help them get through a few months, but when there is a real issue they will be in trouble.
You don’t necessarily need a 15-page lease with language even an attorney couldn’t understand. You should have something that offers the protection you desire and has the rules you want to enforce in place. Write down the three biggest things that are nonnegotiable lease breakers for you. This could be anything from smoking to pets to parking concerns. Make sure your attorney includes these front and center in the lease. Hopefully, you will never have to refer to the lease but if you do you will be glad you have the lease you really want.
Understand real estate law
Another helpful landlording tip is to widen your knowledge around real estate law, because without at least a minor understanding of it, you’ll likely run into obstacles down the line. Each state has unique laws surrounding housing and housing discrimination. As the owner of a rental property, you’ll need to understand the reason why you’re able to deny housing to a potential applicant. For example, you can’t deny housing to a large family because you don’t want to house a large number of people. However, if the head of the household has previous evictions on their record, that is cause for denial. Discrimination lawsuits are never a good thing and can cost landlords a substantial amount of money even in the best-case scenario.
It’s also important to understand real estate when needing to evict a tenant. Landlords need to follow the appropriate legal channels for eviction, including undergoing the proper required legal procedures for renting the unit to begin with. Just because you want a tenant out of the property immediately doesn’t mean you can sidestep the rules and regulations involved with making the property vacant. This is why knowing how to avoid legal issues when they come up is such a valuable tip for landlords. By knowing the appropriate legal processes for application and eviction, you can easily avoid costly losses.
Consider hiring a rental property manager
It has often been said that the smartest people know what they don’t know and find ways to compensate for it. As a landlord, there are plenty of odds and ends needed during almost every lease. You can bet that there will be a clogged toilet, broken refrigerator, or window that needs replacing along the way. If you don’t possess the time or aptitude to do them, you should seek out a dedicated property manager. A property manager will come at a cost to your bottom line, but it will free up your time to focus on other areas of your business without being burdened with property and tenant issues all day. If there is residual cash flow, it is something that should at least be considered.
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Landlording might seem like a cumbersome task, but by knowing the do’s and don’ts of being a landlord, new and old landlords alike can approach their property with transparency and broadened understanding. With these helpful tips, rental property and real estate investors can approach their property’s well-being with stronger awareness, increasing profits and saving money in the long term. Even better, GSI Home Solutions specialize in CASH AS-IS offers to help expedite the real estate experience.
If you need assistance with rental property landlording or wish to sell your rental property quickly, contact GSI Home Solutions today!
Original article here:https://www.cthomesllc.com/5-dos-and-donts-of-landlording/