Renting out your property for the first time can be a thrilling experience. If done right, you’ll be able to pay off your mortgage, gain equity and enjoy steady income. However, it can also be a daunting task. Being a new landlord means you will encounter various challenges and make a few unavoidable mistakes.
That said, there are some things you can do to protect your rental property and maximize your profits. To be a successful property owner, you need to constantly learn and adapt. In this article, you’ll learn useful tips to guide you as you start your rental business.
1. Treat Your Property as a Business
Your rental property may not be your main business, but you still need to allot time to manage it. As a property owner, you need to do everything possible to prevent problems from happening. One of the best ways to do this is to keep your property in top condition.
You need to make sure your property is safe and well-maintained before renting it out. Be willing to spend money for regular property maintenance and repair.
Some ideas include:
- Having the smoke detectors checked
- Ensuring the pipes are working well
- Making sure the vents are debris-free
Also, once your tenant moves in, make sure that you have a reliable repairman on call.
2. Know Your Fair Housing Laws
If you don’t research and understand the Fair Housing Laws, it can be a costly mistake. These laws protect people from discrimination when it comes to housing. To better understand the law, you may consult a lawyer who specializes in landlord-tenant laws.
In order to have a successful rental business, you must comply with federal, state and local laws. This will also help you maintain your reputation as a landlord and avoid future legal problems.
3. Set the Right Price
To determine the right rental price, you need to research the fair market rent price in your area. The price shouldn’t be based on your own perception or your expenses. If you’re able to set a reasonable rental price, you’ll be able to attract good tenants easily.
4. Market Your Property Effectively
Since most tenants search online for properties, you need to make use of online marketing methods. Make the listing as informative as possible. Upload clear photos of all areas of the property to help the prospective tenant visualize the unit.
5. Screen Tenants Properly
One of your top priorities is to find a responsible and trustworthy tenant who will pay the rent on time. Late payments can affect your cash flow and evictions can be very costly. That’s why it’s crucial to screen prospective tenants prior to accepting them.
Ask prospective tenants simple questions about their work, income and reasons for moving.
Set aside time to check their credit report, eviction history and criminal record. In their application, make sure they include past landlords as references. You need to contact these landlords one by one to ask about your prospective tenant.
6. Have a Lease Agreement in Place
Once you’re able to find the right tenant, you need to have a lease agreement in place. The lease agreement is a written contract between you and your tenant which states the terms of the lease. It also includes the rights and responsibilities of the landlord and tenant, and should be signed by both parties. When disputes occur, the lease agreement will help settle it and offer the owner legal protection.
All the clauses in the agreement must be aligned with state-specific laws. That’s why its helpful to consult a local lawyer to make sure everything in the agreement is valid.
7. Enforce and Follow the Rules
After setting up the lease agreement, it’s your responsibility, as the property owner, to ensure the rules are enforced. For example, when your tenant fails to pay rent on time, you need to impose a late fee. If your tenant stops paying rent for a long time without proper communication, you need to start evictions.
Being too lenient with your tenant and not enforcing rules will affect your business, particularly your rental revenue.
8. Beware of Pets
You’ll be able to have a wider pool of prospective tenants if you allow pets in the property. However, there are disadvantages of allowing pets as well. For instance, poorly trained pets can cause damage and leave unpleasant smells in your unit.
If you allow tenants with pets, make sure the security deposit will cover all necessary repairs and clean-up expenses.
9. Invest in Renovations that are Profitable
It’s good to renovate your property to make it more attractive. However, only spend on renovations that will yield a higher rental rate.
Some owners spend a considerable amount to renovate the bathroom tiles, add marble countertops and a posh den. However, their property is located in a neighborhood that is not high-end. This means that they aren’t able to justify to their tenants the increase in rent.
10. Collect Rent Online
Online rental payments are more convenient, easy and secure. Your tenant can also set-up automatic deduction system from their account. This will lessen late payments, which means you’ll have regular rental income each month.
Collecting rent online will also allow you to easily monitor and record each payment. You will be able to check when the payment was made, when it withdraws and when it’s deposited to your account.
Mailing checks can also be risky as they can get lost in the mail and the bank account details can be stolen. Personal information is safer in online transactions because it’s encrypted.
Collecting rent online is the best way to make sure you’re paid on time every month.
Bottom Line
If you’re a new property owner, renting out your property may seem overwhelming and challenging. However, with research and preparation, you can overcome obstacles and avoid future problems.
If you want help from experienced property owners, contact RentSmartUSA today for all your management needs.