Becoming a landlord for the first time can be intimidating. It’s a big job that comes with many responsibilities: maintaining the property, managing tenants, rent collection, and making sure you pay all your property expenses each month.
To help you get off to a good start, here are some tips to follow:
- Treat your rental property like a business
Even if you only own one rental property and it doesn’t contribute much to your overall income, it’s important to treat it like a business.
For example, you should maintain a professional relationship with tenants. It’s okay to be friends, but that doesn’t mean you need to grant favors or tolerate poor tenant behavior. Expect to be paid rent on time and collect a late fee if you aren’t. Enforce the rules so tenants don’t take advantage of you.
It’s also important to manage your rental income well. Start by separating your personal and business finances by getting separate bank accounts and credit cards for each. Also, keep good records. These can include receipts, maintenance requests, and more.
- Protect your business
If you haven’t already, consider forming a limited liability company (LLC) for your rental property business. Why? Because it can protect your personal assets like your house and car in the event a tenant decides to sue you.
Similarly, get landlord insurance. This can protect you from unexpected property damage and expenses that come as a result of natural disasters like floods and fires.
- Create a written rental contract
A written contract is another way to legally protect yourself (and tenants). It’s an essential element of any landlord-tenant relationship. You can hire a lawyer to help you write one from scratch or use one of the many free templates available online.
Every rental contract should lay out the rights and responsibilities of both parties, the rent amount, the lease period (most are 12 months), and policies regarding late payments, evictions, and so on.
Try to think of every possible contingency and be as specific as possible about how they will be handled. Over time, you can refine your rental contract template as needed.
- Find quality tenants
Most people search online for places to rent. So, list your rental on popular property sites like Zillow, Rentler, and Realtor.com. Run online ads. Try to get your rental listing in front of those most likely to be interested.
Your listing should include a compelling rental description and high-quality photos that highlight the property’s top features. If you have any major rules regarding pets or smoking, state them upfront so you don’t waste time finding the right tenants.
From there, screen applicants. Perform background and credit checks on them to get a sense of whether they would make responsible and respectful tenants. If possible, talk to them in person and get to know them before you accept them as tenants.
- Get help where needed
Finally, don’t be afraid to ask for help. Sometimes you can’t do everything on your own, and it makes sense to outsource to contractors: plumbers, electricians, painters, or property managers that handle it all.
For example, Green Residential, a Houston property management company that helps local landlords, handles its clients’ tenant screening, eviction processing, maintenance and inspection, and more.
Of course, a property manager will collect a fee for their services, but it may be well worth the investment, depending on the deal.
At the end of the day, being a landlord is a learning experience. You’re bound to make some mistakes, but you’ll improve over time until, one day, you have an entire real estate empire!