So, you want to be a landlord? You want to rent out your property to earn extra income and build wealth. Plus, it’s pretty easy to rent out a home, right?
You just need to post an ad and great tenants will find you. Or so you think.
Unfortunately, renting out your property is a bit more complicated. Good tenants can be hard to find. And, keeping your property in good physical, financial, and legal shape can be challenging. Especially for a first-time landlord.
However, with a solid plan and the right tips, you can be a successful landlord. That’s why we created this post. In it, you’ll learn the top tips to help you thrive as a landlord. Let’s start with the first tip – screen your tenants.
Having good tenants is essential to having a successful rental property. Good tenants pay rent on time. And, they take care of your property. Bad tenants, however, rarely pay rent on time (or at all). And, they can cause extensive damage to your property. This could end up costing you more than you make from your rental.
So, how can you make sure you have good tenants?
You should conduct a background and credit check. And, you should look for tenants with steady income, no history of evictions, a good credit score, references from past landlords, and a history of making payments on time (to name a few).
If you screen your tenants properly, you’ll end up with good people as your tenants. As cool as your tenants may be, you shouldn’t befriend them.
You’re in a business relationship with your tenants. At the beginning of every month, you need to collect money from them. It’s harder to collect rent from or charge late fees to friends. Or, if the worst happens, evict them.
So, it’s important to be approachable and friendly, while maintaining a professional relationship.
If you price your rental too high, no one will rent it. But, if you price it too low, you’ll lose money each month. Plus, having your property priced correctly can help you get tenants quickly.
When setting your rate, you should look at other similar properties nearby. This can give you a base rental price. Then, you can adjust it up or down based on interior finishings, amenities, neighborhood desirability, and more.
It’s important to make sure your rental rate covers your expenses. Like mortgage, maintenance, and HOA. And, you should aim to make a profit on top of covering your expenses. Pricing your property right can help you do that and attract great tenants.
To get the most for your property, it needs to be in good shape. Not outdated or dirty. So, you should think about sprucing up your rental with things like a fresh coat of paint, durable and stylish flooring, and midrange appliances (if needed).
However, you should avoid any over-the-top upgrades. Renters won’t pay significantly more for top-of-the-line appliances, quartz counters, or spa bathrooms. So, you won’t get a good return on investment for lavish projects.
Making sure your tenants pay rent is your top priority. If tenants have to jump through hoops to pay rent, they’re less likely to pay rent on time – or at all.
So, it should be easy for tenants to pay rent. Technology is a great way to make paying rent easy. One option is an online rent portal. You could also have an app tenants can use to pay rent. Whatever tech you choose should make it effortless for tenants to pay rent.
The last thing you want is to get in legal trouble over your rental property. So, you need to know federal, state, and local rent laws. That way, you know how you might have to accommodate tenants. And, what rights tenants may have once they move in that could be detrimental to you.
Your lease is a legally binding agreement on rules you and your tenant have to follow. If you have a weak lease, your tenant could get away with paying rent late, damaging your property, and more.
A good lease should have the rental term, rental amount, payment schedule, rental insurance requirements, repair and maintenance policies, maximum number of occupants, and rules and regulations (to name a few).
Renting property is a business. As such, you need to keep detailed records of your income and expenses. Otherwise, you won’t know if your property is profitable. And, you’ll lack the documentation you need at tax time.
You should also keep records of leases, tenant documents, interactions with tenants, and more. That way, you have records in case of a problem down the road. Or, if tenants need their rental records.
When you first start renting your property, it’s tempting to spend rental income. After you pay your mortgage, your rental profit is fair game, right?
Not exactly. It’s a smart idea to save excess rental income in an emergency fund. That way, if you find yourself without tenants unexpectedly, you can still pay your mortgage. You should save 3-6 months mortgage and expenses to make sure you’ve covered.
Running a rental property is so much more than just finding tenants. You need to make sure you’re legally protected. And, you need to have your finances in order. Plus, you need to fix things that go wrong on your property and do regular maintenance.
You can’t do everything your property needs yourself. So, you need a great team to help. Your team should have an accountant, handyman, rental/eviction attorney, real estate agent, appraiser, and insurance provider (among others). That way, when something goes wrong, you have a team of professionals to help you get through it.
Often overlooked, landlord insurance is crucial to your success as a landlord. If a natural disaster strikes, a fire burns down your property, or any other event damages your rental, you could have to pay for the repairs yourself.
You could also be on the hook for repairs if you have a homeowner’s insurance policy instead of a landlord insurance policy.
However, if you have landlord insurance, you could get help paying for repairs. And, landlord insurance could protect you from liability if tenants injure themselves on your property. Plus, landlord insurance could compensate you for missed rent while making repairs.
With all the time and resources you put into being a landlord, it only makes sense to protect your investment.
Being a first-time landlord is exciting. It offers you an additional revenue stream. And, helps you get the most out of your property.
But, it can also be challenging to ensure your property is profitable. You need great tenants, the right rental rate, an awesome team, and more. Following the tips in this article can help you reach profitability quicker. And, with less stress.
One way to make being a landlord less stressful is by choosing the right landlord insurance provider. The traditional landlord insurance process is time-consuming and tedious. Instead, choose the modern approach. That’s what we do at Obie. You can get a quote in minutes. And, the process is online and transparent.
Plus, with Obie, you could save an average of 25% on landlord insurance.
Protect your rental property by getting your quote from Obie today.