Are you a new landlord?
Starting your rental business is an exciting process, but doing it right is important. Being a landlord comes with many duties and responsibilities. Learning about rental property investing is necessary in order to be successful and prosper.
As a landlord, you’ll face numerous challenges from tenant screening and lease agreements to potential evictions and emergency repairs. Having a solid base is the most effective way to deal with whatever is coming in your way.
In this article, we are going over the essential tips for first time landlords. Putting these ideas and suggestions into practice will help you become more confident in maintaining and growing your rental investment.
Enforce Your Rules
Your rental agreement states all the rules that regulate your renters’ tenancies. As a new landlord, you may be lax about enforcing the rules. You may believe that being adamant about the written agreements makes you unfriendly. However, this is untrue.
In reality, you should always enforce the rules. Otherwise, it’s highly likely that your tenants will start taking advantage of your leniency.
Grace periods are fine, but once they end, it’s crucial to enforce late rent fees. This is a matter of principle and financial discipline.
Likewise, you should follow all the rules, too. For instance, make sure that you serve your tenants notice prior to entering the rental unit.
Charge the Right Rent Amount
Finding the correct monthly rent amount sounds easier than it is. It’s easy to overcharge or undercharge your tenants when you are just beginning your rental property investor career.
Undercharging leaves your hands emptier at the end of every month. The real income potential of your rental unit won’t be reached and that will negatively affect your return on investment.
That said, overcharging comes with its own set of problems. Asking for too much money leads to a higher tenant turnover rate. If your tenants feel like they pay too much, they’ll leave. Finally, when it’s time to find new tenants, you’ll find it more difficult to generate interest and attract applicants. Overcharging can kill your investment.
That is exactly why your focus should be on conducting comparative market analysis. This is the proper tool for understanding how much rent other landlords command in your area for similar rentals. Then you can find the correct balance that reflects the market averages in your neighborhood.
Draft Detailed Lease Agreements
Lease agreements regulate the legal relations between the landlord and the tenant. A lease agreement is the first document to check in case there are any disputes between the two sides.
Your lease agreement should include the following clauses:
- Landlord’s and tenant’s responsibilities
- Pet policy and rules
- Smoking: allowed or not?
- Eviction-related clauses
- Amount, time, and payment method of rent
- Late payment fees, if applicable
- Unique agreements or requirements that are legal in your area
Send a Welcome Letter
Good landlords write and send welcome letters to their tenants. These letters should contain all the basic information covered in the lease agreements without the legal jargon. This gesture could eventually encourage tenants to stay longer.
You should also include your complete contact information. Make it known that your renters can contact you any time they have an emergency or rental issue.
Understand Relevant Laws & Regulations
Owning rental units means that you need to familiarize yourself with the laws and regulations that govern your actions and the relationship between you and your tenants. Making sense of the key principles lowers the risk of costly legal issues later on.
Here are the major areas that you should learn about:
- Serving advance notices for landlord’s entry
- Rent payments and late fees
- Inspections: move-in, move-out, drive-by, others
- Landlord’s and tenant’s rights and responsibilities
- Security deposit amount, storage, deduction, and return
- Filing for eviction & self-eviction as an illegal procedure
Consider Professional Property Management Services
When you are just starting out, self-managing may be too time-consuming and difficult.
Most regular landlord tasks require a considerable time investment. Both beginners and experienced landlords can benefit from professional property management services.
Partnering up with a trustworthy company reduces daily stress and worries. You won’t have to deal with screening your applicants, advertising your rental property, dealing with legal challenges, and many other aspects of rental management.
A reputable property management company like Cairncross Property Management focuses on nurturing and growing your rental investment. We are going to use advanced skills and practical knowledge to get the best return on your hard-earned dollars.
In a Nutshell: Essential Tips for First Time Landlords
Buying an investment property and renting it out to tenants is a solid strategy for earning income and growing your personal wealth. However, as with any other venture, you should learn about the basics before taking any further steps. When there are big sums involved, you shouldn’t rely on trial and error methods.
Here are our top suggestions for first time landlords:
- Create detailed lease agreements that cover all the important aspects, including rent payments, smoking rules, and pet policies.
- Weigh the pros and cons of professional property management services to take the serious self-management workload off your shoulders.
- Make sure to enforce all the rules that are in your lease agreement: being overly accommodating may backfire sooner or later.
- Send a welcome letter to your new tenants detailing the main information and rules in an easily digestible manner.
- Find the best rent amount that strikes the right balance between overcharging and undercharging your tenants.
- Learn about all the relevant laws and regulations on the federal, state, and local levels to ensure full compliance.
For further inquiries, contact us today.