How to Become a Landlord
I’m publishing a guest post today, for which Money Counselor has received compensation, on the topic of becoming a landlord. Please offer your feedback in the comments!
If you are considering renting out a property you already own, or you want to invest in a new one, you may need to take a quick course on best landlord practices. Becoming a landlord has the potential to be a profitable pursuit and now is a better time than to jump in than ever before. The market of first-time homebuyers is shrinking. After the 2008 Subprime Mortgage Crisis, homes lay empty, and escrows grinded to a halt. This has led to slow growth for the housing market. For example, Millennials—young adults who were born between 1981 and 1997—are buying homes less frequently. Renting has become the norm; many millennials do not have the established income necessary for settling down. Student debt, the inability to gain credit, and other factors are preventing them from leaving their parents’ homes or their city apartments to purchase their own property. Thanks to this desire for rental properties, there’s never been a more lucrative time to try your hand at land-lording.
Find a Property Niche
In an ideal world, you would already live near an era with an excellent rental market. As first time homeowners slowly settle, they are drawn to certain cities to buy homes. Some of these cities include Denver, Colorado; Seattle, Washington; Dallas-Fort Worth, Texas; Richmond Virginia; Salt Lake City Utah; and Austin, Texas. Unless you already live near or plan to move to one of these cities, these may not be the right choices for you. With that aside, living near your rental property is convenient because—especially for first time landlords—you will likely have to make a lot of repairs yourself, especially when you are preparing to show the property again to new applicants. Check out Zillow.com to find available houses in your area.
Understand State and Federal Laws Regarding Rental Properties
Reviewing all aspects of law including discrimination laws, real estate laws, and especially landlord-tenant laws, will prepare you for routine activities as well as necessary interventions. The Fair Housing Act is especially important, as it does not allow for any discrimination in very certain terms. If you are not aware of these laws, you can unintentionally violate them. Essentially, remaining unaware of the policies can leave you vulnerable to many traps you may not have considered. Also read your state laws regarding this, as they may have even stricter rules.
Appeal to the Tenants You’re Looking for
If you want high quality tenants, then you need to treat your property like you deserve them. The higher the quality of the property, the higher quality of tenant you can get, provided that it’s in the appropriate location. To get the right tenants, make the right investment on your property. This may mean investing in curb appeal; hire a professional painter, use landscaping services, and make sure you don’t show the house on trash day.
Be Firm About Rent
Yes, your tenants need to pay rent on time. No, they cannot pay late without a late fee. Let the tenants know your rental policies up front, and do not be afraid to enforce them. You are the landlord, after all, and you have to make a living.
Who is the Owner?
If you are the owner and also the landlord, you’re not necessarily required to tell your tenants. If you are just the property manager, then you are only carrying out the owner’s policies. If they know that you are the one making the policies, they may try to argue with you. Nobody can argue with the owner, provided the policies are within law.
Make Your Policies Clear
Your policies must be clearly stated, in writing. Making them up without writing them down leaves you vulnerable. If the policies are in writing, then there is nothing a tenant can accuse you of lying about, or else twisting your arm that you have a gap in memory. Speak with legal counsel to ensure your lease is up to date and legally binding.
Need some more tips? Check out SmartMove’s extensive tips on how to be a landlord and make sure you follow all the necessary steps to make your rental property business lucrative.