Being a landlord can be a great business, but it can also be very challenging if you’ve never done it before. From finding and screening tenants to doing your taxes, there are many different aspects of the job to consider before you start. Luckily, there are plenty of people who have gone before you in the profession and have tips for first-time landlords that are sure to help you out.
Our 9 Best Tips for New Landlords
1. Carefully select your tenants
One of the most important things when renting out a house or apartment for the first time is to make sure you select the right tenants who will pay rent on time and take good care of your property. Even if you buy a property with existing tenants, it's important to do a proper background check and make sure you have the same understanding of what's expected from each part.
With so many online rental listing sites, it’s never been easier to find tenants. But there are still some guidelines you should follow to ensure you get quality tenants.
When you list your property online, make sure to clearly outline all your policies and rules. That way, there shouldn’t be any doubt about them for anyone who applies to be your new tenant.
Once you start receiving tenant applications, make sure you do a proper tenant screening prior to accepting anyone. There are plenty of tenant screening services that will do background checks for you for about $50 on average.
A tenant background check will make sure you’re not renting to anyone with a history of bad credit, unemployment, eviction, or serious criminal activity.
2. Document everything in pictures
Once you’ve selected tenants, the next step before they move in is to photographically document the condition of the apartment. This helps avoid disputes related to any damages that occur while the tenants are living there.
Take pictures of everything, and we mean everything, on the inside and outside of your property. Then, as soon as your tenants move out, repeat the process and take pictures of all the same things for comparison.
Having these before and after pictures will remove any doubt about when damages happened if you need to withhold the tenants’ security deposit for any reason.
3. Have a written rental agreement
One of the biggest mistakes many first-time landlords make is renting out their properties without having a written and signed lease agreement with their tenants.
A written rental agreement is the best way to lay out all your expectations clearly regarding rent payment and other policies, so both you and your tenants can refer to them if there are ever any issues down the road. If you want to set specific rules about firearms, pets or other sensitive topics, this is where you should do it.
If your tenants ever commit lease violations and you need to evict them, this is the legal document that will help you out the most in court.
4. Make sure you know your state’s landlord-tenant laws
Every state has different landlord-tenant laws, which govern what rights both parties have. They typically cover things like what types of background checks you’re allowed to run, what needs to be in your lease agreement, how security deposits are handled, and what the lease termination and eviction requirements are.
Since the laws can vary so much from state to state, it’s important to know what the local laws are to ensure you comply with them and avoid any legal hassles.
5. Set business hours
With people living in your property 24/7, it’s easy to fall into the trap of working around the clock. In order to avoid this, set strict business hours during which you are available to discuss routine matters with your tenants via phone or email.
Don’t reply to messages or answer phone calls outside of your regular business hours unless they are related to emergency matters.
6. Collect rent payments online or through an app
The best way to collect rent payments is through an online payment portal or a rent collection app. These ensure you get rent in a timely manner (much faster than cashing checks) and also make paying rent much more convenient for your tenants.
Your tenants can even set up automatic recurring rent payments, so they don’t forget to pay on time or pay late when they are on vacation. Plus, you can send automated rent-due reminders.
7. Get the right insurance coverage
Another one of the most important pieces of advice for landlords is to make sure you get the right insurance coverage — for both you and your tenants.
This means requiring renters insurance for tenants in order for them to move in, which is a type of insurance that covers damages to tenants’ belongings in the event of an accident that affects your property. This is usually a very affordable insurance that your tenants will be happy to have if they ever need it.
To protect yourself you need to get landlord insurance, which is different from regular homeowners insurance. Landlord insurance protects your property’s structure, as well as provides lost rental income coverage and liability coverage.
Having both of these landlord-tenant insurance policies in place will ensure you are not liable to cover damages out of pocket if something happens that affects the inside or outside of your rental property.
8. Maintain your rental property in good condition
A big part of running a good rental business is treating your property with care and keeping it in good condition for your tenants. This means performing regular maintenance checks and doing seasonal maintenance to ensure everything is in good shape.
Not only does maintaining your property in good condition help your relationship with tenants, it also reduces the chance of bigger, more expensive problems in the future.
Examples of regular/seasonal maintenance to perform:
- Plumbing maintenance
- Landscaping (leaf removal, weeding, mulching, tree/bush trimming)
- Window washing
- Cleaning siding/roofing
- Electrical maintenance
- Snow removal/salting
9. Don’t forget about taxes
Last but certainly not least in terms of tips for becoming a landlord is to not forget about your landlord taxes. The best way to understand how your rental income fits into your state/federal tax obligations is to work with a tax professional who has experience with doing taxes for landlords. There are even a number of tax deductions for landlords.
You might even consider doing this before you start renting out your property, so you can determine the right amount to charge for rent to make your new rental business work to your advantage.