When you own a rental property, there are about one million different decisions to make regarding the investment. Okay, it may not be quite that many decisions, but there are definitely some matters that take some deciding on. It’s important to become well versed in the different parts of being a landlord. The more you can learn about the subject early on, the more time, money and headaches you can save on the back end.
The common things most landlords have to make decisions about revolve around the tenants, leases, and property maintenance. We’ve got the 101’s of these subjects below. Also make sure to look through some of our recent articles that dig deeper into each of the subjects!
Finding Qualified Tenants
There are two main parts to the tenant journey. The first is finding the right tenant and the second is maintaining a healthy relationship with the new occupant of your property.
Having your prospective tenants fill out an application is one of the most important steps to finding the right person to live in your investment property. This will be the first step to weeding out the strong applicants from the unqualified applicants. The application should give you a good understanding of the potential renter’s employment situation, employment history, income level, references you can contact, and whether they have pets.
You want to find somebody that can take care of the property, pays rent on time, and will be positive to work with. If the candidate does not have a strong application, there is a good chance that they might not be the best tenants to live in your property.
- Credit and Background Check
After finding one or some suitable applicants, it’s a smart idea to run both credit and background checks. These pieces of information will help you determine if the applicant has a history of paying their bills on time and if they have a record with the law.
You should look to see if their credit history shows a history of late payments, bankruptcy, large amounts of debt or any other red flags that may prevent them from consistently paying rent. In the background check, make sure to look for criminal history, a record of past evictions, or any other public records that may shed more light on the character or qualification of the tenant.
Remember, you don’t have to deny applicants for any and all credit or background problems. Few of us have perfect track records, and potential tenants are no exception. But you do need to find somebody whose credit report and background check show that they would be a person who will respect your property and consistently pay you rent.
- Previous Landlords
There is no better person to talk to than the person that has already worked with the applicant on a tenant/landlord relationship. It’s a smart thing to talk with the former landlord, and check to see if the tenant has been on time with rent payments, if the tenant caused damage to the rental, and if the landlord would consider renting to the applicant again.
Again, in an ideal world, we’d be able to trust that every tenant applicant is 100% truthful. However, in the off chance that some of the application wasn’t fully truthful, try to verify that who you call and talk to about the tenant is who they say they are. Consider meeting with the previous landlord in person and verify they are who they say they are.
It’s happened before, and it’ll likely happen again: a tenant puts down a phone number of a reference or landlord that may not be whom they say they are. Protect yourself by always verifying that the name and number on the application matches up with the person you’re trying to get ahold of!
- Contact References and Employer
The person you chose to live in your house can really make or break the landlording experience. Do you best to understand who the tenant applicant is, and if they would be a suitable person to live in your investment property. Talking to references and employers can shed more light on whom the person really is.
Take a moment to get to know the person you’re considering to lease the property to. Finding the right tenant will make your life so much better. Consider doing a short interview to better understand the tenant. Remember, the Fair Housing Act stipulates that a landlord is not allowed to discriminate based upon color, disability, family status, national origin, race, religion or sex.
The lease is the legal document that spells out the agreement between the new tenant and yourself. This is such an important step in the tenant journey, so make sure you have the proper lease. Each state has it’s own laws and regulations about leasing and the tenant/landlord relationship, so make sure to consult with your local attorney to make sure the lease meets local requirements and has all the important points included.
Some basic points that a lease should include are:
- Who: the names of the landlords and tenants
- Where: the address, apartment number or description of the property
- When: when the lease starts and ends
- Terms of rent: specify how much is owed, when the payment should be made, what payment types will be accepted, where payments should be sent, and what happens if rent is late
- Security deposits: how much is being held as a deposit and how this should be applied if there are damages to the property
- Pets: the lease should specify if pets are allowed, and if they are, what types/sizes/number of pets can live in the house
- Repairs, damages, alterations: who is responsible for repairs to the property, what happens if the property is damaged, and what alterations can the tenant make
- Right to entry: the lease should specify under what conditions the landlord may enter and how/when the landlord should provide notice to the tenant before entry
- End of lease and renewal: what would cause the lease to end and how the steps needed for the tenant to renew the lease
With any property comes maintenance and upkeep. Over time, the components of the house wear out and break down. Sometimes, this comes in the form of small fixes, such as replacing a light bulb. Other times, maintenance can be expensive, such as replacing a roof or the HVAC system.
It’s a smart idea to plan out who will be maintaining the property before things go south. Do you have the skills, time and qualifications to do the work yourself? Or should you hire a professional?
If you’re going to be hiring a professional to do work on your house, start the search before you’re in need of the work. A handyman is usually one of the best people to have in your maintenance network. A skilled handyman can solve many small and moderate sized housing projects, and are often times a reliable way of getting projects fixed, without paying the absolute top dollar prices.
However, some projects are going to be beyond the scope of a handyman’s ability. Always be on the lookout for a dependable electrician, plumber, HVAC technician, and roofer. The jobs that these professionals will complete are often pretty expensive, and are a big investment in your property.
You want to have a team around you that you can trust and count on. Always be on the lookout for professionals you might hire. Ask friends, family and other landlords who they hire to do work on their own properties. Establish communication with these maintenance professionals, and let them know that you might call on them if you need work completed.
When you get the call from your tenant at 3:00 AM saying the roof is leaking, it’s nice to have somebody that you know you can call and count on. Get your team in place before you need help, and you’ll save the hassle when you do need to make that phone call!