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Landlord-to-Be: Tips to Live ByNovember 07, 2017
After releasing a “High School Handbook For Young Entrepreneurs” CEO of TenantCloud Joe Edgar wanted to share some additional tips from his experience with landlords who are setting out to grow their investment portfolio. Specifically, what to look for in your first rental property. The most common reasons for becoming a landlord are investment, inheritance or necessity. Each have a different approach to managing a rental.
Investment landlords purchase a property with the intention of renting it out for rental income and tax advantages. In most cases, there is no intention of living in the home. Inheritance landlords are typically those who are helping parents or a family member with a rental property. Moving to a new city for a job and unable to sell your property so you put it up for rent means you are now a landlord out of necessity. Each of these three reasons make you a landlord, but may each have a different solution to having the best rental experience and therefore highest return on the investment.
Give your tenants an easy way to communicate, so they don’t have to call, text, fax, drop by, or any other function that requires face-to-face time. There are now many online solutions that offer such tools for allowing tenants and landlords to communicate with messaging, applications, e-signature, report maintenance issues, updates, pay rent, collect late fees and more all built into one place (FYI TenantCloud does all of this). This allows you the flexibility to address any issues that might arise from the convenience of your phone, but also saves you time and energy. Having everything in one place will save you time and having a way to communicate without meeting face-to-face will help you avoid any awkward issues that arise when being a landlord.
Location, Location, Location
Investors typically look for a general type of home in which they like to invest. Some pick college housing, or suburb homes near parks and schools. Look for an investment property of which you understand the market and the potential tenant. If you inherited the rental than you didn’t get to pick the property or the tenants. Familiarize yourself with the neighbors and the neighborhood, so you know more about the tenants and any new prospects. Renting out of necessity means you didn’t design the house for renting and most likely want it kept up to sell. No matter how you entered the game, it is important to arm yourself with the expectation of what you want out of a tenant.
Before buying, renting or taking over someone else's property you need to do a full inspection. A rental property needs to be checked out for any issues prior to buying, an inherited property requires you to know what you are getting into before you help out and documenting every part of your previous home is a must. Having expectations of what you are renting out and the conditions it will be in when the tenant moves out is very important.
Pay attention to the appliances, roofing, flooring, and any water damage. Equally important you need to prioritize routine inspections of the rental property. Every lease should start with a move-in inspection. Move-in inspections will document the condition of the property and help you determine how much, if any, of the security deposit will need to be kept at the end of tenancy.
You can’t let just anyone live in your rental property, but depending on the rental market who may want to be more or less stringent on qualifying factors. Steady job and qualifying income are basics for all tenants, but credit history may lead you to lose rent in the rental is in a lower income rental area as it sits vacant to find the one. Positive rental history is also important, but be willing to adjust any issues based on market. Create a rental application that meets the needs of each property, but remember to not discriminate based on demographics. You can look at the legal screening criteria so at the Federal Fair Housing Laws, to help in creating an application. TenantCloud also allows you a free application that is customizable to any question you need.
Your lease will include property rules and terms of tenancy and should outline details about rent payments and what will happen if any lease terms are broken. Where it will differ in specifics for lawn care and watering for a previous home, attic storage to remain locked and other items that might be involved with a previous home you are now renting out of necessity.
The required deposit might also be something to consider as different for each type of rental. A rental duplex will always have tenants and getting a tenant in as quick as possible is important. If the carpart of general rental is design to be rented than a lower deposit can help get a new tenant fast, whereas a previous home might require a larger deposit to find the right tenant.
If the you inherited the rental than it might be a worthwhile effort to have a new lease signed with you as the signatory. If anything goes wrong you will want to be able to act quickly and if you need to chase down signature to move towards an eviction it could cost you even more in lost rent due to the duration of time.
Owning a rental property is an exciting and daunting process. No matter why you have the rental there are some key things to focus on, but remember that why and how should also play a major role in setting expectations. This task has been made easier with free resources available online. I will be glad to answer your questions if you have any. Hope this info helps to get as more as possible on your first attempts in rental world.