When you have a house, apartment, or land that you want to rent out for extra income, you can realize some profitable benefits. With the right tenants, things basically take care of themselves. That’s not to say that you won’t have general maintenance and other responsibilities, but if you take care to protect yourself and your investment, you can avoid many headaches.
If you follow some guiding principles in your rental procedures, you won’t succumb to the same horrors as other landlords have.
Get a Signed Contract
When you, as a landlord, have a contract drawn up and signed by all responsible parties, you avoid any gray areas of understanding. For example, you should clearly stipulate the consequences of missed or late payments, notice requirements, damages, pets, and property care, just to name a few. When there are specific guidelines and rules that both parties discuss and agree to, it protects both sides. It is, however, legal leverage for you should problems begin to arise.
Hire a Professional for Repairs
It’s a common misconception that you will save money if you just make the repair yourself. That idea may be fine for some issues that arise, but if you don’t have experience in repairing the electrical or plumbing aspects of the property, do yourself and your tenant a favor and hire a professional. It will likely be a savings in the long run that you’re sure to appreciate.
Perform Background Checks
People can put up a good appearance by looking nice and saying the right things to convince you that they’re the best tenant for your property. When you perform the appropriate background checks, you at least have the facts there to make an educated judgement call on whether they’re a great tenant or a good risk. Information that you should verify includes rental history, criminal background, and credit history. Ask them questions when you’re showing the property and compare notes with the background information.
Pay Rental Income Taxes
The best suggestion here is to keep your financial matters within the law. You don’t want to risk paying fines for late payments or possibly losing your rental property all together. Unless you’re adept at doing your own books, it’s recommended that you hire an accountant who can keep you out of legal trouble. They should keep you apprised of all aspects of your rental income and payment due dates. If you do find yourself with legal issues, hire an attorney that’s experienced in working with tax issues.
Perform Regular Checks with Tenants
One of the items you should include in your initial contract is a pattern of regular property checks. Decide how often is comfortable for you to just get on the property and inside the dwelling to see how well it’s being maintained and if there’s anything you need to do to improve the circumstances. Some landlords want to do this monthly, while others are fine with every three to six months. It’s a good idea to keep a positive flow of communication between yourself and your tenant.
Be Tough When Necessary
When you’re a fair and compassionate landlord, it can definitely help establish a good working relationship between you and your tenant. It can also spell trouble for you if you’ve rented to someone who sees those attributes as weaknesses. That’s why having a signed contract up front is so necessary. You may want to overlook one missed or late payment, but it could snowball into more issues with the tenant. Of course, the length of time they’ve been a tenant and their history could have some bearing on the situation for you, but it could also be the point of no return if you don’t adhere to the rules out of the gate.
In summary, do the research on the best practices to follow as a landlord. It will assist you in deciding if being a landlord is the right path for you. It can also help clarify whether you should contract an outside property management company or take care of the property and tenancy yourself.