Starting out as a landlord can be overwhelming. Without prior experience, you may struggle with marketing your rental property. You may also need to curate a list of contractors and vendors in preparation for property maintenance. Aside from that, you may not know the first thing about tenant screening. Suffice to say, being a landlord carries many responsibilities.
Aside from the normal duties of a landlord, one needs to acquire several skills. These skills include communication, customer service, and legal knowledge. To protect yourself against a potential lawsuit, you need to learn about rental laws and regulations.
Here are 6 tips that are essential for first-time landlords:
1. Take advantage of online marketing.
Online advertising has a much wider reach than traditional marketing. There are many benefits to marketing online. You can measure the performance of your ads by looking at the traffic of your website or listing, and it is cost-effective because you save on printing materials and transportation costs. The advertisements are also available online 24/7.
There are so many free online platforms available that finding your target market is easy. What’s more, you can answer inquiries about your listing right away. If prospective renters need more information, you can quickly provide more resources. Scheduling showings can also occur in the online space. In fact, you can even send a property video tour as a pre-showing.
Some of the best rental websites include:
Zillow Rental Manager
You could even consider building a website of your own!
2. Hire a property manager.
Given that first-time landlords lack adequate management experience, hiring a property manager is sound advice. It would allow them a direct look into how professional property managers run a rental business.
While you can learn things along the way, errors can be costly. If you have an experienced property manager at the helm, you’re assured that the business operation is efficient.
Juggling a multitude of tasks from property maintenance to screening renters requires considerable time. Do you live a good distance from the property? Is a hands-on role too much to handle initially? If so, you can entrust a property manager to keep track of the business.
You won’t need to worry about legal issues, financial recordkeeping, and contacting contractors for major repairs.
Before engaging the services of a property manager, check out references. Ask good questions and compare offered property management service plans. Avoid looking at the fees alone and focus on the value you’ll be getting.
3. Have a detailed tenant screening procedure.
Be wary of accepting the first applicant to your rental unit. While you may feel elated that a vacancy is prevented, make sure to screen your applicants. See if the prospect can afford to pay the monthly rent.
Check if he has a clean criminal record. Look at his credit score and interview references. Reviewing the applicant’s rental history allows you to gauge his suitability.
As a new landlord, you need to familiarize yourself with the Fair Housing Act. There are protected classes outlined and it’s important to know what they are prior to interviewing your prospects.
Violating the Fair Housing Act results in a hefty fine. Even if your mistake is unintentional, you’re still liable under the law.
You can ask your applicants to send you documents for your assessment such as:
W2 or paystub
Offer letter for the newly employed
Completed rental application
4. Ask the tenant to apply for a renter’s insurance.
While living in your rental unit, tenants can experience loss in property. This can be caused by unfortunate disasters such as theft, flooding, or fire. Other personal problems could also leave the tenant financially at a loss. The renter’s insurance can help a tenant in case of temporary displacement.
Landlords can ask tenants to obtain renter’s insurance to reduce their liability. This way, you’re protected against potential lawsuits. If an accident occurs such as a tenant sustaining injuries from another tenant’s pet, the renter’s insurance would cover the medical expenses.
Renter insurance is affordable and would help a landlord limit his liability a great deal. The amount of renter’s insurance will depend upon a tenant’s possessions. If one has more valuable belongings such as luxurious jewelry or high-end gadgets then the insurance amount should be higher.
5. Collect rent payments online.
Given the busy nature of peoples’ lives, having an online rent payment channel is a convenience most, if not all, of your tenants, would welcome. Bill payments have transferred online so it’s only logical that this includes rental payments.
The best thing about having an available online rent collection is its 24/7 accessibility. In fact, it reduces the necessity of reminders and notices to pay. Bill payments can be scheduled through bank enrollment. This results in automatic pay transfers every due date.
As a landlord, you’ll benefit from the online rent payment arrangement. You’ll be able to monitor if there’s a current transfer and also see the payments in real-time. Collecting the rent consistently will be a breeze. There will be fewer excuses to contend with given the transparency of online transactions.
Only receiving rent payments through the mail can be risky, especially when faced with consequences such as a lost check. Online, there’s less security risk and the speed of the transaction makes it convenient for both the tenant and the landlord.
6. Keep digital records.
Receipts are evidence of payment and are an important reference for tax filing. If you’re managing several rental units, you can easily lose paper copies of these vital documents. To prevent this from happening, it’s wise to have a backup digital record of everything.
You should have digital copies of lease agreements, bill payment receipts, rent payments, and repair and maintenance receipts. Additionally, in the unfortunate case that you find yourself in court, you’ll have the proof in your hands.
Since you’re handling a rental business, being organized is key to having a smooth operation. This way you’ll avoid the stress of looking for previous documents, especially during conflicts. Having digital records on hand allows you to protect yourself.
You might also consider finding out how to prevent tenant damages and avoiding disputes, by reading our blog post here.
Being a landlord for the first time might seem overwhelming and confusing, but it doesn’t always have to be. With the proper amount of preparation and a little bit of help from a professional property management company, you can be ready to manage your rental property and its tenants.