Let’s say you have a property that you are considering to rent out, either you are going to buy a new property or you are looking for somewhere else to live. Renting your property out is a great way to have some cash flowing your way but it is important to take a step back and understand the responsibilities of a landlord before jumping in. I have put together some tips for you to avoid some common mistakes and to be a step ahead of the game.
First things first, it is crucial that you live near your rental property. If you are looking for a new rental property to buy, it would be helpful to do some research into the best investment areas around you. If you already have a property you want to rent out, make sure that your new living area is close by. Here are some reasons why: it allows you to be able to go over quickly when repairs are needed, it allows you to be able to check up on the property but not before giving your tenants notice, and you will be able to show the rental property often when it is time to list for rent again.
Another piece of sound advice is to know your tenant-landlord laws, as these may vary from state to state. An easy was to do research now is online. Look up the area you will be renting in and familiarize yourself with the laws. Some of the primary areas to look into in regards to tenant landlord laws are: landlord disclosures, security deposit limits and returns, late feel rules, termination and eviction rules, and landlord access to rental property. There are obviously more to just those and I would recommend spending a good amount of time researching and reading about the laws of rental properties. The last thing that you would want is a lawsuit because you didn’t take a little extra time to read through the laws.
Have a respectful but firm relationship with your tenants. This is not the time to be “too nice.” And trust me, people might try to take advantage by turning in the rent a few days late or not following certain rules you set in the lease. Be sure to be firm but on the other hand, manners and respect cost nothing. A friendly but disciplined relationship can truly make the difference in avoiding uncomfortable situations down the road.
Make sure to include regular inspections in the lease and do them! Again, you would have to give the tenants proper notice (in California it is 24 hours notice of entry) but there is nothing unusual about inspections, this is your property in the end! I would suggest taking pictures before and saving them in your records to have proof of what the property looked like previous the tenants.
Lastly, understand it takes money to make money. This simply won’t be a process in which you will be merely sitting on a couch receiving checks in the mail. While the check will definitely be a part of it, there is also a lot of work and money that go into being a landlord as well. You might need to invest in spending money on remodels before looking for tenants. You will have to purchase landlord insurance and be making payments on property taxes. You should also have some money saved up for unexpected repairs and maintenance.
Hopefully these tips have shed some light on the realities of being a landlord and what is to come with this endeavor. Good luck!