Investing in real estate may be a lucrative and worthwhile endeavour. But being a landlord is not always easy. So here are some things to consider.
There are various reasons you could find yourself pondering renting out a house. Perhaps you wish to purchase a new home and have difficulty selling your current residence. Or maybe you’re moving for a short time and don’t want to leave your house empty for a long time. And the abundance of home foreclosures makes real estate investing an attractive prospect. Whichever reason you choose to become a landlord, there are hazards and issues to be aware of.
Screening potential tenants
Once you’ve decided to rent a house to someone, you become a landlord. And you are being a landlord isn’t for the faint of heart. No matter how responsible and trustworthy your tenant might at first appear, the unfortunate truth is tenants don’t have nearly as much to lose if the property isn’t maintained correctly. Therefore, it’s imperative to screen prospective tenants as a landlord thoroughly. To do this, Consumer reports may be used to analyze rental applications as long as the Fair Credit Reporting Act (FCRA) regulations are followed. Be aware; however, if you deny an applicant based on a consumer report, you must notify them in writing. Failure to provide this disclosure notice can result in a lawsuit.
Your written lease agreement
Be sure you use a written lease or month-to-month agreement that fully details certain information such as the names of all tenants, occupancy limits, term of the tenancy, amount of rent, deposits and other fees, pet policies and certain restrictions. Nolo.com is an excellent site to do some necessary research on the subject of lease and rental agreements.
Upkeep of your rental property.
At some time in our lives, the bulk of us has been tenants. Keep in mind what it was like to have something go wrong, submit a service request and wait for it to be resolved. Making repairs to your rental home promptly will result in a happy, cooperative tenant and protect your investment. Asking that your tenant put their requests in writing enables you to document them. Making prescheduled visits allows you the opportunity to be sure the property is being well taken care of. Be sure to give your tenant at least 24 hours notice before entering the property.
Record keeping
Keeping accurate records of any repairs, insurance costs, and other expenses is essential for tax purposes. Additionally, it is a fantastic method for estimating prices for future reference. In addition, when the time comes for a lease renewal, this gives you an idea of if a rental increase is necessary.
Open communication between landlord and tenant is a must.
If all goes well and your tenant-landlord relationship is amicable, consider yourself fortunate. Many landlords are faced with problems such as non-payment of rent, disputes over maintenance and repairs, destruction of property caused by people and pets, complaints made by neighbours or law enforcement and a variety of other reasons. Attempting to discuss the situation with your tenant should be your first option. Keep records of all written correspondence and notes of conversations. Keeping communication open between you and your tenant allows issues to be resolved before leading to a costly legal battle.
Mediation for tenant issues
If you’ve tried every means possible to reason with an unreasonable tenant, you might consider mediation; It is often accessible for free or at a reduced rate via community mediation programs. Call your county clerk or mayor’s office to find out more information on the mediation process.
Evicting your tenant
If mediation fails or your tenant refuses to comply with your request for mediation, you may have no choice but to initiate the eviction process. But before beginning an eviction, you must first legally terminate the tenancy, which means giving the tenant written notice. Your state dictates this process. At this time, it is prudent to retain the services of a lawyer.
Property management companies
If being a traditional landlord sounds a bit overwhelming, but you still see the financial advantage of buying an investment property, you may consider hiring a property management company. For a fee, usually, a percentage of the rent, property management companies will do most of the work for you, including any routine maintenance. Property management companies can be found online or in business telephone directories.
