Tips for First-time Landlords
Purchasing an income property is one of the largest investments that you can make, which makes it normal to be a little apprehensive about trusting someone to care for your property. Will they have wild and crazy parties, putting your property at risk of damage, or will your prospective tenants be courteous and respect the rules as outlined in your lease? It can be a weary endeavor, but it can also be a rewarding one, financially. The following tips can help to make your first year as a landlord a smooth one.
Renovations = Higher Rent, Sometimes
Prior to renting out your property, you may want to make a few renovations, which can help to make your property stand out and attract more prospective tenants. For instance, installing solar panels can help to not only reduce the amount of electricity used, but it can also be an additional source of income. As noted by Landlordology, in some instances, you may be able to sell back the excess energy that is produced by the solar panels to the grid. If you want to just spruce up the inside, that is a great idea too. A fresh coat of paint and new flooring can really jazz up a place. However, you will want to keep the rental market in mind, as renovations do not always mean an increase in revenue.
Be Objective
When it comes to renting out your property, it may be tempting to rent to a tenant who may be going through a difficult time in life and is looking to you for a way to get back on their feet, so to speak. However, while you are ultimately responsible for the decisions you make when selecting a tenant for your rental property, it may not be a wise investment to allow your heartstrings to be involved with this process. As HGTV points out, if your tenant is late with rent, that, in turn, can make a mess of your own financial standing, as you may be unable to cover the mortgage or additional costs that you are liable as a responsible person.
Legal Responsibilities
As a first-time landlord, it can be easy to become overwhelmed by the responsibilities that are associated with such an investment. You may want to consult with an accountant or bookkeeper who has experience handling such transactions in order to stay on top of items such as taxes, and a lawyer to ensure that you comply with the fair housing laws in your area. Also, be prepared to pay higher rates for your homeowner insurance on your rental property when compared to the premium you currently pay on your primary residence. However, you might want to shop around, as insurance companies can vary in regards to their coverage and premiums. You can also urge your tenant to obtain renters insurance which can help to cover any losses or damages that may occur.
Protect Your Sanity
Trusting someone that you have only known briefly with the care of your property can be a test for your sanity. However, steps such as ensuring proper documentation, can help you to sleep at night, knowing that you have taken the necessary actions to protect your property. Consider providing your new tenant with a condition report that both parties can review upon move-in, as well as after the tenant has vacated the property.
Conclusion
Whether you have poured your blood, sweat, and tears into your rental property or if you purchased a turn-key property, trusting another to care for it in the same manner you would can be stressful. Fortunately, there are some tips that can reduce the stress involved with such an investment responsibility. However, if it sounds a little overwhelming, contacting a rental property management company can take much of the burden and daily stress out of your first time being a landlord.
References
HGTV. (2017, August 18). 22+ Tips for First-Time Landlords. Retrieved from https://www.hgtv.com/design/real-estate/tips-for-first-time-landlords
Landlordology. (2016, December 9). Top 10 Tips for First-Time Landlords. Retrieved from https://www.landlordology.com/first-time-landlord-tips/
Nationwide. (2018, April 9). New Landlord Tips: Advice on Renting Out a House For the First Time. Retrieved from https://www.nationwide.com/tips-first-time-landlords.jsp
Steinbarth, S. (2017, November 30). Practical Tips for First-Time Landlords. Retrieved from https://www.forbes.com/sites/forbesrealestatecouncil/2017/11/30/practical-tips-for-first-time-landlords/#47e4c2381e73
