Rental properties are among the best ways to earn an extra stable income and secure your finances. Besides being a source of regular income, it is also a highly sound and less risky investment. Despite the many advantages, learning how to be a landlord can be intimidating and comes with responsibilities that require hard work and commitment.
If you are a first-time landlord planning to buy a home for rent or you are moving and want to rent out your old place, this article is for you. Here are five things every new landlord must know to help you maneuver the world of property rentals successfully.
The Basic Laws
Renting out a home is more than just listing it on the market and finding a tenant. You must be familiar with housing laws and regulations governing your relationship with tenants for compliance purposes. Doing so protects not only you and your property but also your tenants. The law comes to play in most situations including when approving new tenants, formulating policies, writing a lease agreement, and even during evictions.
Fundamental laws you must be conversant with include the Fair Housing Act(FHA), which protects tenants from discrimination, and the Fair Credit Reporting Act, which applies when screening new tenants and checking their credit reports. Other laws include land-tenant state laws as well as tenant eviction procedures. Working with an attorney will make your work easier and ensure you stay compliant.
Upkeep and Maintenance
As part of your responsibilities, you must ensure that your property is always in excellent condition. If your property needs repairs or renovations, you should complete them before accepting new tenants. Also, expect emergency maintenance calls and the expenses of maintaining the property.
To reduce the hassle, build a network of reliable professionals such as electricians, plumbers, and handymen. Also, create a regular inspection and maintenance schedule to help you identify the property’s pain points early before they escalate and become more complicated.
Get a Property Manager
As a new landlord, handling everything on your own can quickly become overwhelming if you have other responsibilities like a full-time job. If your only focus is being a landlord, you may be able to manage the property on your own. Otherwise, working with a property manager can take some of the burdens off your shoulder.
You can delegate a wide range of duties to your property managers, from marketing the property and screening new tenants to dealing with tenant issues and collecting rent. Property managers are beneficial, especially if you live far from the rental property or cannot commit your entire efforts and time to run it. A competent property manager can streamline your landlord duties and deliver a stress-free rental process.
How to Accommodate People with Pets
Most people rely on pets for companionship. As a new landlord, it may not be possible to ban pets or animals on your property completely. Some people have emotional support animals as a treatment for disorders like anxiety. Since they are medical tools instead of pets, the FHA requires you to provide reasonable accommodation for them. Therefore, consider implementing practical ways and policies to accommodate pets.
Deal with each tenant individually instead of setting universal policies such as the size and type of animal. You may also require the pets to be neutered and vaccinated and screen them before letting them into your property. Lastly, consider a refundable pet fee as a buffer against pet damage on your property.
Common Downsides
Knowing the challenges of being a landlord will equip you with the necessary information to deal with them effectively. Below are common downsides you can expect as you practice how to be a landlord.
It is Time-Consuming
Running a rental property requires time and money. Even with the help of property managers, the final decisions still lie with you, such as renovating a rental unit or even evicting a tenant. You will still need time and effort to keep your business running smoothly.
Taxes
You can reduce your tax burden through deductions on expenses such as repainting, insurance, and even depreciation. However, you will still have to pay rental taxes and deal with the accompanying paperwork.
Expenses
As a new landlord, you must be ready for expenses, some of which are not tax-deductible. These include taxes on income, maintenance expenses, certificates, employee costs, and agency fees if you opt for one.
It is Long-Term
Investing in rental property means your money is locked in, and you shouldn’t expect to profit immediately. Also, if you decide to stop being a landlord, selling the property and freeing your assets can take a while.
Becoming a landlord requires researching, outlining your investment goals, and weighing the pros and cons before committing to it. With the above information, you can confidently explore how to be a landlord and begin your journey toward financial security.
