Renting out a property to other people can be one of the most lucrative real estate business ventures nowadays. With more people looking for a comfortable place to stay, it can be a great way to earn more money in the long run.
However, being a landlord can be a challenging and overwhelming undertaking, especially if you’re just starting out. Just like any other business, the rental market also comes with its own ups and downs. Hence, if you want to understand why a rental property investment can the best move you’ll make, then you need to stay on top of the competition to make it more successful.
If you’re starting out your rental business, below are the five things you should consider as a landlord:
- Legal Rules You Should Follow
Before you rent out your property to tenants, it’s imperative that you know and understand the different rules and regulations that govern this kind of business. By becoming well-versed in these laws, you can rest knowing that your business will be on the right path financially and legally.
So, as a landlord, the following are the legal rules and regulations you should keep in mind from the get-go:
- State and local laws: It’s important that you’re familiar with these laws as they may affect your ability to start up a rental business in a particular area. For example, you need to learn about the zoning laws so you’ll know whether your property in a particular location can or can’t be used as a rental. Also, check if there are special fees or taxes that need to be paid before you can rent out your property to tenants.
- Fair housing laws: You should also make yourself aware of these laws so you’ll have a good idea of what housing practices are considered discriminatory to your tenants and to yourself as a landlord.
- Rules on security deposit: While each state has different security deposit requirements, it’s best if you know the specific rules applicable to your area. Typically, a security deposit refers to an amount of money a tenant agrees to deposit to a landlord before occupying the rental unit. However, disputes relating to security disputes can happen if you don’t know the rules. Thus, be sure to know them all to avoid problems later on.
- Rights of the tenants: As a landlord, you’re protected by law by having landlord rights. But just like you, it’s also essential to learn about the rights of your tenants to avoid any issues in the future. By knowing their rights, you’ll not do anything that may put you and your business in trouble. Therefore, if you have a rental business wherever you may be, always know your tenant’s rights to protect yourself from legal problems.
- Money For The Expenses
As a landlord, renting out your property to tenants is never easy. Since it’s your property that you’re talking about, you need to make some improvements or perform a major renovation to provide a comfortable and welcoming space to your renters throughout their stay. In order to do this, you should consider setting aside a sufficient amount for the potential expenses. Since you have to sell the dream, it is important you know who your land buyer is. If your land isn’t developed yet, your potential buyer is going to be very different than if the land is already developed
For example, you’ll probably replace your property’s roof and other fixtures, or repair the windows eventually. These are huge expenses that you must be prepared for to avoid financial problems afterward.
That being said, make sure you’re financially capable of handling these concerns when they arise. Remember, failure to provide a good place for your tenants can result in hefty fines and other legal troubles.
- Hiring Of A Property Manager
If you don’t live near your rental property, then hiring an experienced property manager can be a worthwhile decision to make. As a landlord, it’s your responsibility to commit to the hands-on role of managing your rental business. But in case you’re an entrepreneur who runs more than one business, then getting someone who can keep an eye on your rental property can be an excellent idea. This is to ensure your rental business will survive even if you’re not hands-on with it.
Generally, from marketing your rental place to collecting rents and dealing with tenant issues, the property manager you hire can help you keep up with your landlord responsibilities. However, in choosing someone to help you with this matter, be sure to consider those who can be trusted and have experience in managing a rental property.
- Right Rental Price
In addition to hiring a property manager, setting up the right rental price is one of the things you should consider as a landlord. With an appropriate rental price in place, you’ll be able to attract more renters and earn a considerable amount of income from it. Hence, to set up the proper price, it’s crucial that you research the market to know the fair market rent price applicable in your area. Also, you can make use of some online applications that can help you calculate the potential rental rates you can offer for your property.
Lastly, in determining the right rental price, be sure to think about how it can impact your finances in the long run. Besides, you can’t deny the fact that your rental rates are your primary income source for your rental business. This means that if you want this undertaking to thrive for a long time, always keep an eye on your rental price and change it, if necessary, to ensure you’re monetizing your property properly.
- Tenant Screening Process
Another important consideration a landlord like you should make is the tenant screening process. While it’s best to have more tenants renting out your property, some of them may only bring some problems along the way.
Therefore, to eliminate tenant problems as early as you can, be sure to conduct background and credit checks on all applicants who want to live in your property. Don’t forget to call their last two landlords and ask how they were in paying their rents. In short, you should make sure all your tenants are capable of paying their rents regularly to prevent misunderstandings and stressful evictions. Also, try to keep yourself away from becoming friends with your tenants so it’ll be much easier to enforce the rental agreement with them.
Indeed, the path to becoming a successful landlord is never easy. But as long as you keep these considerations in mind, along with carefully conducted research and planning, you’ll have a greater chance of getting long-term gains and make your rental property a thriving business.