Being a landlord can be hard, especially when you’re starting out.
From finding and screening tenants, creating and following a rental agreement, and collecting rent online, we will guide you through all the important landlord tasks.
Get started with these 9 must-know tips for first time landlords:
1. Treat Your Rental Property Like a Business
Managing your rental property may not be your primary job, but it is still a business. It’s important to remain professional and keep your finances in mind at all times.
In order to conduct good business, you need to comply with federal, state, and local laws. Making sure your business follows all necessary laws is a key way to maintain a positive reputation and avoid legal problems.
You should also protect yourself from accidents or liability claims. One important way to protect yourself is to buy landlord insurance. If an unfortunate situation arises, like a pipe bursts or theft occurs, landlord insurance can protect you from bearing the loss. This means you won’t have to pay thousands of dollars if a tenant sues you.
Conducting good business also means preventing problems before they happen. The best way to avoid problems is to keep your unit and building in good condition.
Before renting to tenants, double check that your building is a safe place to live. It’s worthwhile to spend money to make sure everything is up-to-code and all utilities work.
Once you have tenants living in your unit, you should be prepared to fix dangerous problems immediately. For example, how will you fix the heat if it breaks in the winter, or how will you help a tenant who gets locked out? Having a plumber, locksmith, and contractor on call for emergencies is the best way to be prepared.
Being professional, keeping your finances in mind, following laws, protecting yourself from liability, and preventing tenant problems are the best ways to manage a good rental property business.
2. Find Tenants Online
The majority of tenants are searching online for their next apartment, which means the most effective way to find tenants is to create an online rental listing. Promote your listing on sites such as Zillow, Trulia, or HotPads.
The key to finding tenants is to create an online rental listing that tells tenants what they want to learn. They’ll want to know the rent price, the address, number of bedrooms and bathrooms, amenities, and nearby attractions. More informative listings are better. You’ll also want to upload photos of every room and common space, as tenants will be more interested if they can visualize the space.
An appealing rental listing that highlights your best features and announces your requirements is the best way to attract quality tenants who will pay rent on time and take care of your property.
3. Set the Right Rent Price
To set the right rent price, we recommend researching your market in order to learn the rent price of similar units in your area. This is your best bet for setting a rent price that makes sense in your location.
As you set your rent price, you should keep in mind how it affects your financials. After all, rent payments are your main source of income on your rental property. To compare your rental income to your rental expenses, you should list your fixed and estimated expenses. Fixed expenses are your mortgage payment, property taxes, insurance fee, and HOA fees. Your variable expenses are utilities, repairs, and property improvements. By comparing income to expenses, it’s easier to see how rent price affects your monthly revenue.
There’s no point in setting the right rent price if you have tenants who don’t pay on time, which is why the next tip is critical.
4. Create and Follow a Tenant Screening Process
The main goal of tenant screening is finding quality tenants who pay rent on time and take care of your property as if it were their own. To select responsible tenants, you should:
Require a rental application
A good rental application gives you information: name, current address, reason for leaving current residence, employer information, income, and references. It’s important to ask the right questions so you have information you need to make a decision about who will live in your property.
Require a credit and background check
Credit checks are among the best ways to learn if an applicant is financially responsible or not. Look out for these red flags: outstanding debt, undue payments, bankruptcy filing, and prior evictions. A solid financial history is a predictor that a tenant will pay rent on time. Requiring a tenant background check is an important way to learn whether a prospect has a relevant criminal history.
5. Have a Written Rental Agreement
Having a written rental agreement is the best way to communicate your expectations and protect yourself in legal situations. Oral agreements are not sufficient. While they’re legal in some instances (usually for agreements that are less than 12 months), they’re less effective than a written document signed by both parties. It’s difficult to prove what was agreed upon without a written document.
All of your rules and clauses must adhere to state laws. Our lawyer-reviewed rental agreement makes this easy for you. It’s state-specific, meaning your rental agreement will automatically comply with state laws.
A useful rental agreement is also specific. You should think through what rules you want to include. Are pets allowed? Will there be a late rent fee? Do you want a noise restriction rule? Make sure your rental agreement is customized for you.
Having a rental agreement that is specific to your rules makes communication with your tenant easier. If everything is mapped out in the rental agreement, there will be less confusion down the road.
6. Enforce and Follow the RulesYou need to enforce the rules in your rental agreement, otherwise your agreement loses its importance. Tenants will notice if you do not enforce rules and may take advantage. The most important rule to enforce is your late rent fee. You can allow a grace period, but after that, you should make sure your tenant pays his or her late fee.
Tenants are more likely to follow rules if you do too. An example of a rule you should follow is the Notice of Entry rule, which typically requires 24-hour notice before entering the unit. It’s best to be respectful of the rules. Tenants appreciate this, too.
7. Collect Rent Payments Online
Online rent payments are more convenient and more secure. The easier it is to pay rent, the more likely your tenant will pay. Tenants can even set up scheduled payments so their rent is automatically taken out of their account. Tenants love the convenience that online payments offer, and you will love getting your payments on time every month.
Collecting rent online also provides clarity. You can immediately know when a tenant schedules a payment, what day it withdraws from his or her account, and when it will be deposited in your account. With online payments, you never have to hear, “The check must have gotten lost in the mail.”
Furthermore, it’s risky for tenants to mail checks. Their check can get lost, or worse, their bank account details can end up in the wrong hands. Personal information is encrypted in online transactions. An online payment will rarely be lost in translation like a check.
With added convenience and security, paying rent online is the best way to make sure you get paid every month on time.
8. Keep Digital Records of Everything
As a landlord, you should keep records of everything: deposit receipts, rent receipts, maintenance receipts, and a record of all landlord-tenant communication. Digital records can be securely organized without creating paper clutter.
Holding onto receipts and communication records is a good idea in case legal issues emerge. If you have records of transactions and communications, then you are more likely to prove you’re right in court. Having evidence to support your claims is always a good idea.
Keeping records is how you professionally manage your business. Storing them digitally is the most organized, up-to-date way to do it.
9. Keep Good Tenants
After spending time finding tenants, screening tenants, and signing a rental agreement, you don’t want all of that effort to go to waste. Constantly repeating this process can be exhausting. The best way to preserve your time and money is to keep good tenants.
If you have a tenant who pays rent on time and takes good care of your property, then you should ask him or her to renew about 90 days before your rental agreement expires. Renewals help you avoid a vacancy and help you save time by not having to search for new tenants.
From managing your rental property business, finding and screening tenants, and collecting rent, every step along the way matters. We want you to manage a top-notch rental business without sacrificing unnecessary amounts of time, money, and stress. With the right advice and landlord tools, being a landlord doesn’t have to be hard.