Renting out your home can be a great way to earn extra income, but the life of a landlord isn’t always rosy. This active investment requires you to constantly be on the ball, or pay someone else to be. No matter how involved you are, however, there’s a chance things might not always run smoothly. Fortunately, we’ve come up with 10 tips to help the first-time landlord manage the road to successful renting.
1) Rent Must Take Priority
This should be a given, but many landlords are surprisingly lax when it comes to pursuing rent. As a landlord, rent is your revenue, and it’s important that you stay on top of it. It might go against your nature, but sometimes you have to be aggressive when it comes to late fees and unpaid rent. If tenants refuse to pay and will not communicate, you have to start eviction proceedings.
2) Screen Your Tenants Properly
Late payments, or no rent whatsoever, can usually be avoided by ensuring you properly screen your prospective tenants. Again, it might not seem nice to treat people in this manner, but this is your investment and revenue at stake. Pay attention to credit scores and insist on rent references and proof of income.
3) Think Long and Hard About Your Pet Policy
You may love pets, but as a landlord, you have to constantly think ahead. If you allow pets into your property, at worst they can cause major damage to carpets, walls, and furniture; and at best, even the best-behaved animals will shed and leave hair everywhere. Future tenants may have allergies and be instantly put off. Puppies and kittens, as well as older cats and dogs will almost certainly pee on your carpets or hardwood floors, and that odor won’t come out easily. If you do allow pets, consider a pet deposit to cover deep cleaning costs at the end of the lease.
4) Know Your Local Laws
If you choose to manage your rental yourself, be sure you know the ins and outs of the local legislation. Knowing the local laws will keep your rights as a landlord protected, but it is also useful to be up to date on renter’s rights. By getting all of this in the tenant agreement, you can be sure you and your tenant know where you stand from the get-go.
5) Take Care With Expensive Renovations
If your property is in a neighborhood where rental prices are generally mid-range, there’s no point in undergoing top of the range renovations and remodels, as it’s unlikely that the rent you’ll earn will cover the costs. Know your market, how much rent you can charge, and work out a renovation budget based on this information.
6) Stay Organized
Renting your home should be treated as a business, and as such, it’s essential that you keep good records of the rent you receive, any expenses you incur, including your mileage to attend to rental needs, late fees, and receipts. Good record keeping will also prevent penalties if you’re audited and tax deductions are disallowed due to a lack of receipts. Additionally, by keeping track of your comings and goings, you can see how profitable your property is, and have a better idea of how to improve.
7) Run Your Rental the Modern Way
Gone are the days of sticking a sign in the yard and posting an ad in the paper. Online platforms reach a much wider audience than traditional methods, and can allow potential tenants to get a good look at all you have to offer, saving you time on phone calls that go nowhere. The internet is also a great way to take rent payments, and is far quicker and safer than waiting for a cheque in the post, which could bounce, leading to you paying extra fees.
8) Don’t Forget Your Insurance
As a rental property, your home becomes a business asset, and should be insured as such. It’s best to get in touch with specialist rental property insurance providers to see what they can offer. Look for products that cover dwelling protection, detached private structures, and liability. Furthermore, consider optional extras such as appliance coverage, rental income, and water damage protection.
9) You Don’t Have to Go it Alone
If you don’t want to or don’t have the time to be a full-time landlord, there are other ways to rent out your property. Hiring a property manager will typically cost around 8 -10% of your rental income per month, but will also reduce your stress ten-fold. They’ll take care of everything from screening tenants, to dealing with emergencies and also repairs.
10) Create a Watertight Agreement
When you’ve found your first tenant, be sure to get everything down in writing, including house rules, dispute procedures, and processes for how you’ll deal with late fees or non-payment. This tenant agreement should be reviewed by a legal professional, as it protects your rights as a landlord as well as the rights of your tenants, ensuring everyone is happy.