Investing in real estate can be very a attractive and profitable prospect. But being a landlord is not always easy. Here are some things to consider.There are several reasons why you might find yourself contemplating renting out a home. Perhaps you wish to purchase a new home and are having some difficulty selling your current residence. Or maybe you need to temporarily relocate and don’t want to leave your house unoccupied for a length of time. And the abundance of home foreclosures makes real estate investing an attractive prospect. Whatever the reason, there are pitfalls and problems to be aware of when deciding to become a landlord.
Screening potential tenants
Once you’ve decided to rent a house to someone you become a landlord. And being a landlord isn’t for the faint of heart. No matter how responsible and trustworthy your tenant might at first appear, the unfortunate truth is tenants don’t have nearly as much to lose if the property isn’t maintained properly. As a landlord, it’s extremely important to thoroughly screen prospective tenants. In order to do this you may use consumer reports to evaluate rental applications as long as you follow the provisions of the Fair Credit Reporting Act (FCRA). Be aware, however, if you deny an applicant based on a consumer report you must notify them in writing. Failure to provide this disclosure notice can result in a lawsuit.
Your written lease agreement
Be sure you use a written lease or month-to-month agreement that fully details certain information such as the names of all tenants, limits on occupancy, term of the tenancy, amount of rent, deposits and other fees, pet policies and certain restrictions.
Maintaining your rental property
Most of us have been tenants at one time or another. Keep in mind what it was like to have something go wrong, put in a maintenance request and wait for it to be fixed. Making repairs to your rental home in a timely manner will result in a happy, cooperative tenant and also protects your investment. Asking that your tenant put their requests in writing enables you to document them. Making prescheduled visits allows you the opportunity to be sure the property is being well taken care of. Be sure to give your tenant at least 24 hours notice before entering the property.
Keeping accurate records of any and all repairs, insurance costs as well as any other expenses is essential for tax purposes. This is also a good way to gauge expenses for future reference. When the time comes for a lease renewal this gives you an idea if a rental increase is necessary.
Open communication between landlord and tenant is a must
If all goes well and your tenant-landlord relationship is amiable then consider yourself fortunate. Many landlords are faced with problems such as non-payment of rent, disputes over maintenance and repairs, destruction of property caused by people and pets, complaints made by neighbors or law enforcement and a variety of other reasons. Attempting to discuss the situation with your tenant should be your first option. Keep records of all written correspondence and notes of conversations. Keeping communication open between you and your tenant allows issues to be resolved before they lead to a costly legal battle.
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Shifting Rent Controlled Apartments to Market
Mediation for tenant issues
If you’ve tried every means possible to reason with an unreasonable tenant you might consider mediation, which is often available at little or no cost through local mediation programs. Call your county clerk or mayor’s office to find out more information on the mediation process.
Evicting your tenant
If mediation fails or your tenant refuses to comply with your request for mediation you may have no choice but to initiate the eviction process. But before beginning an eviction you must first legally terminate the tenancy, which means giving the tenant written notice. This process is dictated by your state. At this point it might be best to contact a lawyer to assist you.
Property management companies
If being a traditional landlord sounds a bit overwhelming but you still see the financial advantage of buying investment property you may consider hiring a property management company. For a fee, usually a percentage of the rent, property management companies will do most of the work for you, including any routine maintenance. Property management companies can be found online or in business telephone directories.