So you want to be a landlord? Popular television and film have indeed planted comical depictions of landlords in everyone’s mind. Who could forget the eccentric Mr. Shickdance in Ace Ventura or the robed Mr. Heckles from the television series Friends? Perhaps the most classic landlord team comes from I Love Lucy or Fred and Ethel Mertz. The truth is, most landlords don’t walk around in their robes while complaining about the noise upstairs. According to government data, estimates are that about 11 million individual investor landlords manage an average of one or two units each. That’s a lot of individual renters. While some real estate investors have dozens of properties they own, many people rent one or two units out for extra income and to build equity. So what do you need to jump into the role of the landlord?
There is a lot more to it than simply putting a For Rent sign up. Here are some steps you might want to take:
- Get a home inspection. You likely got a home inspection when you first purchased the home, but that may have been a few years back. It’s a good idea to get a home inspection and look at some fundamental things that often go wrong with homes to ensure there are no impending breaks, leaks, or damages.
- Consider safety. Attracting good tenants means having a property that people can feel at home in. This means providing minimum safety standards like smoke alarms and CO2 alarms. Equip the kitchen and other rooms with fire extinguishers and other safety features.
- Aim for clean and fresh. Having a thorough cleaning and carpet wash ensures that your tenants feel they are moving into a clean and reliable place. This includes tidying up the yard, doing some landscaping, and even calling the exterminator to ensure no infestations abound.
- Check and recheck appliances and other furnishings. If you choose to leave the appliances in the home, this can bring you a little more for rent, but it can also cause problems if they break unexpectedly or cause some kind of trouble. Have a professional check the HVAC system, stoves, fridges, washer, and dryer.
- Notify your mortgage and insurance companies. One important step is to contact your mortgage and insurance companies. In most cases, you have to notify them that you won’t be living in the home. Mortgage companies can protect their rights or ensure that you meet any of their mortgage-as-landlord requirements. Your homeowner’s insurance might also have to change to a landlord’s property insurance, which might cover any losses due to tenant negligence.
- Research market value. Get an idea of the rent rates that exist in your area or your neighborhood. Doing a little market research can provide some useful information about the amount of rent you can charge.
- Decide on how you want to rent. You can basically take on the full responsibility yourself or delegate the work of managing the property to a professional property management company. If you are out of the area or moving to another city, managing the property on your own might present some difficulties.
So what are the responsibilities of a landlord? So whether you are doing it yourself or choosing a reputable property management company, some of the tasks that fall under the landlord jurisdiction are:
- Advertising. A home doesn’t rent itself. You might get lucky and get someone that drives by the property and calls you up. Otherwise, people will look on the web or search listings through a property management website.
- Showing the home. Renters will presumably want to see the property before they sign any lease. Someone has got to be available to show the property.
- Drafting legal agreements and leases. Any lawyer will tell you that your rental agreement or lease is vital. The clarity of language, stipulations, and conditions are what can save or break a deal or protect you from bad tenants or an unfortunate situation.
- Vetting the potential tenants. This is not a step you want to take lightly. It’s very easy to find likable people who might not be reliable when taking care of the property or paying their rent.
- Collecting rent. Who could forget this one! While collecting rent every month sounds easy if you have a reliable tenant, seeking payment from tenants that lag on payments or paying late can cause quite the headache.
- Keeping things working. Fixing, maintaining, and repairing. If you’re doing this yourself, expect calls in the middle of the night.
Common Administrative Responsibilities
In addition to the common housekeeping, there are some extra administrative-type duties you might prepare for. These include:
- Dealing with insurance and liability issues
- Keeping books and filing taxes correctly
- Being aware of the local renter’s rights and observing landlord-tenant laws
So yes, being a landlord takes a little more work than just walking around in a bathrobe and collecting rent once a month. That is unless you hire a professional property management company like Reliant Property Management. We take most of the above tasks off your hand.
