Owning a house is a good achievement but being a landlord is even better.
You don’t just have a house of your own, you also have one or more houses that you can lease to people to generate more income for yourself.
To be a successful landlord of one or more multifamily apartments, duplex, bungalow, 2-bedroom apartment, or any other apartment at all, there are some must-know requirements that you should take cognizance of to effectively manage your property without problems.
Real estate is a big business. It can make you tons of cash if you know how to effectively leverage it to your advantage.
One of the easiest and most popular ways to make money in real estate is through rentals.
As you begin to plan on leasing your property to people as a landlord, you need to pay attention to some crucial requirements or factors. This will enable you to protect your property from being misused, and continue to generate more income for yourself for as long as you want.
Want to become a Landlord? Here are the Key Requirements.
Below are the must-know requirements that you must bear in mind if you wish to become very profitable as a landlord.
Have the Right Property
Since being a landlord has to do with making money from your real estate, you need to acquire the right property to enable you to generate income.
Some crucial factors to consider when buying a property are the property type (is it a multifamily apartment, duplex, or triplex?), locality, how developed the area is and its proximity to where you live, and so on.
If your property is situated in a rural area, there are tendencies that your income will below when compared to urban areas. Developed areas like cities tend to have more infrastructure and population, which makes the demand for rentals always on the rise.
So, situating your property in the right place can go a long way in fetching you a profitable and sustainable income.
You should also know the kind of property you wish to lease to your tenant. Will it be furnished or unfurnished? If you decide to furnish it, you will have to factor in all the costs for damages and repairs of the furniture into the rent.
Renting out an unfurnished property might not be as profitable as the furnished one. It is, however, the best alternative.
Determine the Rentals
The price for rentals change from time to time since the real estate market is not static. Hence, you need to keep yourself informed about the current market value of your property to know the right rental fee to charge your tenant(s).
Also, you should be able to determine how you want the rent to be paid. Is it on a weekly, monthly, quarterly, or yearly basis? Therefore, you have to choose a payment pattern or plan that is most convenient for you.
Make up Your Mind
Real estate is a very serious business that you must not take with levity. Be decisive about your actions and focus on achieving your goals as you begin to lease your property to people.
You should also be able to give enough time to the business. Yes, it’s a serious business and you must treat it as one. Don’t be overly nice by mixing business with emotion. Treat your tenants as customers who are paying for a particular service.
Don’t make the mistake of leasing your property to people who want you to accept partial or late payment or those who can’t even pay your rent at all.
The mistake most landlords make is to not take their position as landlords seriously. They just lease their properties to people and get money without putting some crucial factors in place — only to run at a loss afterward.
Hence, you need to be decisive about your actions if you want to be a successful landlord.
Know the Laws
Every state has various housing laws that guide landlord-tenant relationships and real estate business operators in general. Therefore, you need to be armed with the rental laws that are obtainable in your state to help serve as a guide in dealing with your property and tenants.
Bring in Professionals
If you don’t have the time or managerial experience to effectively handle your property as you lease it out, then consider getting professionals on board. The following are those you should be willing to work with.
You will be dealing with a lot of calculations and financial estimations regularly when you become a landlord. Therefore, consider hiring the service of an accountant to handle your finances for you if you don’t know how to do that. This will enable you to generate the right amount of profit from your property.
- Real Estate Lawyer
You can never do away with paperwork when you are a landlord. Hiring a lawyer to help you draft your lease agreement and other documents will go a long way in saving your time and the stress that comes with dealing with legal issues with your tenant(s).
- Property Manager or Caretaker
These are real estate professionals who specialize in managing and making sure that your property is in good condition. Oftentimes, some property or real estate lawyers also perform this function. But if your lawyer does not, consider hiring a property manager.
You can hire the service of the aforementioned professionals by paying them directly or giving them a certain percentage of the rental fee. It all depends on the agreement you have with them.
If you are not DIY-savvy, you will need the service of certain professionals like the plumber, electrician, carpenter, handyman, engineer, lawnmower, and cleaner.
So, you need to be able to build a network of these professionals to enable you to effectively manage your property and make repairs without hassles.
Find the Right Tenant(s)
There are various channels you can use to get a tenant for your property. You may do that through an online listing or a real estate company. Whichever channel you choose, endeavor to have a rental application form available to know the vital information about your potential tenants.
Some of the pieces of information include the tenant’s full name, age, income, occupation, current address, the reason for moving from their current apartment, employer’s information, and landlord reference.
Knowing How to Deal with Your Tenant(s)
Now, this is the most important requirement for every landlord that wants to be successful in the real estate business. Having the right tenant to occupy your property will go a long way in giving you peace of mind and causing you fewer problems.
It will also enable you to have a long-term relationship with your tenant while saving you the stress of issuing quit notice to various tenants regularly.
Below are the various things to know and consider when dealing with your potential tenant(s).
- Screen Your to-be Tenant(s)
This is another factor that most landlords are often lackadaisical about. Some hardly run a background check on their potential tenants before leasing their properties to them — only to wallow in regrets afterward.
As a landlord, you must interview your client by asking them salient questions that pertain to their rental. Do they have any criminal records? Are they capable of paying the rent as at when due? Do they have a good rental background with their previous apartment?
These, among other questions, are what you must be able to get the right answers to.
The screening process will help you to find good and responsible tenants who will protect your property and make you successful as a landlord.
- Document Your Agreement
This is a very important and compulsory requirement for any landlord and tenant. You must endeavor to document your agreement by having a written document that enumerates the fines for damages, misuse of the property, and late payment. This is in addition to the rules and regulations that guide your tenant’s stay in the apartment.
When your tenant agrees to it, you will both sign the agreement in front of two witnesses, and in most cases, such witnesses could be the landlord and tenant’s lawyers respectively.
- Define Your Payment Method
Once you’ve got the right tenant that has agreed to your pros and cons, you should be able to make things easy for them by making the payment method comfortable.
The advancement in technology has made the process of paying for anything stress-free. Your tenants can easily pay from their comfort zone without having to deal with the annoying queue at the bank. Allow them to pay for their rent online. This will make things easier and faster.
Stick to the Rules
Being a landlord involves discipline and commitment. When you make a rule that guides your tenants’ stay and conduct in the apartment, you must ensure that those rules are strictly followed. That’s the only way you can protect your property from being misused.
Some tenants can be pretty stubborn and difficult to deal with. Therefore, ensure that you have the important documents in place to enable you to take action when they misbehave.
Part of such documents is a warning notice and an eviction or quit notice if they insist on not complying with the rules. And since you have a written agreement, it can be tendered in the court if the tenant refuses to vacate the apartment. The court will issue an order to that effect and force them to leave legally.
Have an Archive for All Your Documents
Finally, keep the digital or hard copy of all your documents for future purposes. Such documents include the record of all landlord-tenant communication, rent receipts, deposit receipts, maintenance receipts, and receipts for furniture purchased.
You should also have some clear digital pictures of your apartment(s) before leasing it. All these documents will help you to become victorious when a legal issue occurs between you and your tenant.