Have you bought an investment property or are considering buying one in the near future? Looking to stock up on the rental market?
If you are part of this statistic, it is good to be prepared. After all, you will be investing in a new business. And to start off on the right foot, especially when it’s your first time as a landlord, it’s always helpful to have a guide to follow.
Don’t forget, it’s at the start of operations that we set the tone and pace of our business. Practicing good habits from the first tenant can establish how much time, money and frustration you save over the course of your career as a landlord.
Here are some ways to keep your best foot forward:
As we’ve already said, owning property is a business and it should be treated that way. That is, no matter how you are with your private accounts, if you are not organized with your rental property, you can get headaches in tax season. Creating good accounting habits now can be of great help.
You have several options to choose from when it comes to online applications and services that can help you keep a good record of your deposits, rents, and expenses such as mortgages, property taxes, maintenance expenses, and any materials used.
Do not accept a verbal contract, gentleman’s agreement, or friend’s arrangement. The rental agreement is essential. Don’t fall into the trap of giving in to laziness and using a standard contract. Every unit is unique and it is important to describe its conditions in detail.
Things like grievance contacts, contact forms, conditions and penalties for late payment, pet policies, definitions about renovations and decoration, and subletting can and should be part of what is signed off at the beginning of the tenant-owner relationship.
Take pictures of the condition of the house, record every new tile and every crack in the paintwork. Your diligence will be crucial for when they vacate your property. These photos will help define what damage the security deposit will have to cover.
As with the terms of the contract, try to keep all communication in writing, especially operational matters, rules, notices and notices. Having everything recorded is always a good idea, especially should any conflicts arise between you.
Being a landlord is not just about buying a house and putting a “for rent” sign in front of it. Your planning has to include taxes from the start.
Some points to consider:
And you don’t have to do anything yourself! Talk to a tax consultant and understand each change that will happen in your taxes so you calculate the feasibility of the project before you even start. Always remember- taxes are very important and directly impact your credit scores, so be sure to pay your taxes!
It is very likely that you will need to apply for a Certificate of Occupation (COO). To do this, you will benefit from a crash course on housing laws and tenant rights in your area.
Whether you need a certificate or not, learning the local laws is still your obligation. You need to understand your obligations and your rights so that you are not taken by surprise in the future.
This is a golden nugget of advice! Establish business hours and be faithful to them. The schedule will serve both you and your tenant.
If you don’t set a performance and service time, you’ll end up working all day. And for your tenant, it is much more comfortable for them to know they have an allotted time where they know they can always reach you.
Emergencies do happen, but let those be for after hours and not everything else.
The tenant-landlord dynamic can be difficult, so if you’ve got good tenants, take good care of them. There is nothing better than peaceful coexistence and smooth communication in commercial partnerships.
Remember that there are good practices. You must have been a tenant once in your life, put yourself in their shoes and do for them what you would have liked for them to do to you. Be discreet, don’t show up on the property out of the blue, without warning. If you need to check something, give notice. It doesn’t cost anything, but makes all the difference. Be quick to deal with repairs and any other issues.
Treat tenants with a Christmas card and a welcome bottle of wine. It costs little, but can be the start of a great, mutually beneficial relationship.
Commercially speaking, this is a decision that could make a difference. It’s very difficult to say no, charge delays and set limits for family and friends. The easiest way to treat tenants as customers is to rent to people you don’t have a personal relationship with.
However, if you feel that you have the perfect tenant within this special group of people, and you think that renting your property to them is a good idea, create a strong contract and make an agreement that does not leave room for different interpretations or improvisation.
There are services that provide this, with most background checks costing around $50.
It usually includes a credit check, work history, criminal history and eviction history. This is a small investment that does not guarantee honesty, but shows the financial behavior trends of the person interested in living in your investment property.
From the moment you become a landlord, you become responsible for the maintenance and repairs of that house, whether it is inhabited or not. There is nothing better than having someone you trust to call whenever something pops up.
Owning a property to rent and helping with mortgage costs is a great idea, especially if you’re busy all the time. But we know that even a property located in a hot spot can spend time without a tenant. Be prepared to deal with a lack of income. The ideal is to have a reserve fund available to offset losses during downturns.
Is any of this overwhelming? If you have the house for rent but you lack the time and patience to deal with all the details, consider hiring a Property Manager. This professional is responsible for everything about your investment property, from publicizing the rental offer to garden adjustments or roof repairs.
But remember, this is an extremely trustworthy position. They keep the keys, speak with tenants, charge the late rent and deal with contractual conditions. They must be chosen carefully and with great attention to detail.
Before buying a new property, you should include homeowners insurance in your cost calculations. A Homeowner Insurance policy is the minimum, but you can seek special insurance for landlords that will provide protection for the property structure, other structures on the premises (such as sheds and fences), loss of rental income and liability.
Make it very clear that your insurance does not cover your tenant’s personal property. They should be encouraged to take out renter’s insurance, which covers exactly what your insurance will not cover. Consider including this insurance in your renter requirements! It is important to consult a legal professional before adding this clause to your contract, as certain laws regarding this matter will vary from state to state.
Want to know how much insurance will cost for your investment property? Get a quote today!
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