Whether property rental is your primary or secondary source of income, it is vital to remain professional with your tenants and treat your properties as a business. Just as you would interview and screen an employee, you want to do the same for a potential tenant to ensure they are reliable and have a solid rental background. It’s also important to understand and comply with the laws, both federal and state specific, before starting up your business. Organization is a must for this line of work as you are required to keep finances in line, write up legal documents and maintain properties and relationships with tenants. We will dive into each of these further as we address a few tips for first-time landlords.
Make Amazing Listings Online
Tenants are likely looking to the internet for rental postings, so you must have a presence online. You can promote your properties on popular sites like Trulia and Zillow for free.
Your listing must stand out. Attractive photos are a must and plenty of them. It’s also practical to spell out all of the information in detail: description, price, amenities, neighborhood info, and lease requirements. Specify up front if lawn care, pest control, or some utilities are included. Highlight every positive or unique appealing aspect of the property. Clear photographs and a descriptive listing will help to attract quality tenants and allow them to visualize the space.
Screen All Potential Tenants
You may receive a pile of rental applications and inquiries; a good screening technique is crucial to identify any potential problem tenants. You want a reliable tenant who will pay their rent on time and treat the property as if it were their own, so things like credit and background checks and references can aid in selecting the appropriate tenant to inhabit your property. In particular, check job and rental references; you may ask if they paid their rent on time and verify the rental amount.
The most practical way to accomplish this is to use one of dozens of online services that package up a quick combination background check for landlords, with criminal, foreclosure, and rental history all in one for around the $50-75 range. MySmartMove and RentPrep are two.
Consider Hiring a Property Manager
A property manager can be an excellent long-term investment in this business. Property managers handle responsibilities such as advertising and marketing your properties, collecting rent, and addressing tenant maintenance requests and repairs. If you own multiple properties, the responsibilities can add up quickly. If you live in a different city than your properties, they may not be as readily accessible to you. Placing these responsibilities in the hands of a reliable property management company like Utopia Management ensures that your properties and tenants will be maintained in a professional and timely manner.
Set an Appropriate Rent Price and Establish Permissions
Setting an appropriate monthly rent requires knowledge of the market and property value of the surrounding area. With any business comes expenses, and your rental price, being the main source of income, will affect those expenses and the financials overall. Compare the income to expenses by listing out your fixed and estimated expenses against the rental income.
- Fixed Expenses
- Property Taxes
- HOA Fees (if applicable)
- Variable Expenses
Once you’ve gauged your expenses and done your research on the area and current market, you can establish an appropriate rental price.
Another important tip is to establish permissions based on what you’re comfortable allowing in your rental property. These usually address pets/ deposit fees and home improvements but you may want to expand your permissions to cover things like:
- Is there a cap on how many people can live in the home?
- Will the tenant be allowed to sublease?
- Will you prohibit smoking?
- Will lawn maintenance be required in rent?
Require Submission of a Rental Application
A renter’s application is similar to a job application in that it gives you a rundown on the prospective tenant before you move onto the next step. This application can include necessary information like contact information, current address, landlord references, income and job history and reason for their current move. Having this base knowledge on the tenant will help narrow your decision and move onto the screening process and background/credit checks.
Require Renter’s Insurance
Renter’s insurance is encouraged and helps safeguard your property by covering property damage, liability and legal costs of tenants who may be injured in property, and loss of income should your property result in eviction. It’s important to deliberate with a legal professional when tying insurance requirments into a rental agreement as each state has its own laws regarding this issue.
Collect Rent Online
Online payments are far more convenient than writing an mailing a check, and in this day and age, much more secure. Many of us pay our bills online and have auto withdrawals set up to avoid any late penalties, allowing you to received your rent payment in a timely and reliable fashion every month. Many property management companies have portals where tenants can access recourses, place maintenance and repair requests, and schedule a rent payment. It doesn’t get any easier than that.
Keep Digital Records Organized
Keeping a record of all documents, receipts, maintenance and communication is crucial in managing your business. Having digital records allows for optimal organization without the clutter of paper and filing cabinets.
Hold Onto Good Tenants
It’s true when they say, “Accquiring a new client is more expensive than retaining an existing customer.” Finding a good tenant who pays rent on time and holds a mutual respect for you and your property is the ideal situation, and you want to hold onto that relationship for as long as possible. Ensure that the property remains safe and in good shape for the tenant and adhere to the promises that you made in your lease agreement. Communication is key!