The title “landlord” dates back to the 15th century, when it was used to describe the elite, fur-clad members of feudal society who grew rich by functioning as supreme ruler of the tenants who occupied their land. Today, being a “landlord” can still conjure up images of grandeur, but times have changed since the 15th century. Before you invest in your first rental property (and celebratory ermine cloak), you might want to take a closer look at the responsibilities of modern day landlords.
Here are seven tips to become a successful modern day landlord:
Live near your rental property.
Living near your rental property reduces much of the inconvenience of caring for your property. You will be on hand to perform inspections, take care of maintenance and repairs, and show the property to prospective tenants. Of course, when you choose a rental property, you should look for hot rental markets. Just don’t overlook properties in a good market near you because you are blinded by a dazzling, distant market.
Know the law.
Rental agreements are legally binding contracts. As a landlord, you will be the one preparing and largely executing these contracts, so you will need to make sure that you have a good understanding of landlord-tenant laws. State and local governments have provisions for security deposits, property access, eviction notices, housing discrimination, and more. If your understanding of the law is unclear in any area, you should consult an attorney to avoid expensive and reputation-damaging legal tangles.
Enforce timely payment of rent.
One of the biggest hurdles for new landlords is striking the right balance between friendliness and authority in their dealings with tenants. Although you should always be courteous with your tenants, timely payment of their rent should be non-negotiable. Allowing tenants to be a few weeks late on their rent can escalate into a month or even two months without making rent on your property, and then you may struggle to pay your mortgage.
Choose tenants wisely.
Background and credit checks can tell you a lot about a prospective tenant, and they should always be performed. But don’t rely solely on these measures to help you choose a tenant. You should also interview the tenant to make sure you can establish rapport. You may be interacting with this person a lot in the future, and you don’t want to deal with someone who is unreliable, temperamental, or uncooperative.
Customize the lease.
Standard lease forms are available for your property if you don’t choose to hire an attorney to craft your lease. However, you may need to modify the standard lease to suit your property. The length of the lease, the amount of notice you require before a tenant moves, and the allowance of pets are all aspects of your lease which you may need to adjust.
Perform regular inspections.
Provided that the tenant is given advance notice, a landlord is entitled to inspect his or her property periodically. Be sure that you document the condition of your property when a tenant moves in. Take photographs and written notes. Then, schedule inspections every few months to make sure that the property has not fallen far beneath its original condition.
Don’t expect to get rich quick.
Even when your property is renting at premium, you will have expenses involved with being a landlord. You will be paying the property’s mortgage, paying taxes, paying for repairs and maintenance, and paying landlord insurance. All things considered, most landlords can expect to make 5% return on their property investment.
Although life for landlords today is not as cushy as it was six hundred years ago, being a landlord can still be a smart financial move. By managing your responsibilities and expenses carefully, you can make a tidy profit from your rental property. You might even be able to invest in more rental properties to double or triple your profit.