Entering the rental property industry is an exciting affair as you’ll receive passive income and increase your wealth portfolio over time. However, becoming a landlord isn’t easy. You must learn some basics in order to avoid costly errors.
As a first-time landlord, it’s important to learn about rental management as much as you can. That’s why, in this article, we’ve compiled our top essential tips to help you as a first-time landlord!
1. Brush up on landlord-tenant laws.
Initially, it may sound boring to read through state and local laws and ordinances. However, remember that by doing so, you’re protecting your interests. You want to avoid penalties and lawsuits from unintentional violations. Some of the crucial laws to learn are:
- Security deposit law – know the maximum security deposit limits, refund process and required written notices.
- Fair Housing Act – recognize the protected classes when it comes to offering fair housing opportunities.
- Implied covenant of quiet enjoyment – be aware that renters have a right to live in a rental space free from disturbances.
2. Put all paperwork in order.
Stay organized by creating an efficient system. Properly store your receipts, statements and leasing agreements. Make sure you have extra copies so when tax season arrives, you can find important documents easily.
- Digital paper trail – it’s a good idea to have scanned copies of your files. This can be useful when someone loses their physical copy or when you need to check on important data in the future.
- Bookkeeping – use a reliable system and invest in good software to review your finances quickly. This will also make tax filing more efficient.
- Accountant/s – consider hiring a professional so that you don’t have to spread your time too thin managing people, ledgers and the property. It’s best to find an additional expert in the finance field.
3. Find opportunities for additional income.
When you have a rental property, it’s clear that your main source of income is the rent. However, there are ways to receive additional income by offering extra services to your tenants.
Here are some additional ways to make more income:
- Additional services – you can offer babysitting, pet sitting, laundry, cleaning or gardening services to your renters.
- Rent out extra spaces – charge extra for the use of a storage room, garden shed or parking area.
- Install a vending machine – if you have a multi-family rental property, you can earn more by selling convenient items on the side.
4. Make sure your tenants can reach you especially during business hours.
Strengthen your customer service by being reachable. When urgent matters arise, the renter must be able to contact you. This way, you’re aware of what’s going on in your rental property.
- Provide contact information – ensure that tenants know where to contact you. If you change your number or make a separate business email, update your renters.
- Strive to respond immediately – when you receive a message, try to reply within a 2-3 hour timeframe. If you can’t attend to the matter right away, inform the sender of an appropriate time you’re able to get back.
5. Treat your rental property as a business from day one.
Make all decisions with an entrepreneur’s perspective. Here are some things we recommend:
- Collect late fees – as a new landlord, you may feel uncomfortable or hesitant to remind a tenant of late or pissed rent payments. Make sure your leasing agreement contains a late charge stipulation. This prompts your renter to pay on time, as well as generates an extra income for you.
- Pay attention to your business reputation – focus on elevating your customer service. Online reviews matter. When people have good experiences, they talk about it, and vice versa. As a new rental owner, you want to earn more good reviews from renters.
- Stick firmly to your policies – all the rules in your lease agreement should be followed. If you let the tenant break certain rules, they won’t take any policies seriously anymore. They’ll just bend the rules whenever they feel like it.
- Act professional – since your rental is a business, you must appear respectable in front of your tenants. Avoid gossiping and using disrespectful language.
6. Learn the importance of documentation.
When it comes to the topic of money, disagreements can arise quickly. This is very common when it comes to the security deposit. Calculating for property damages can be easier when there’s clear evidence to justify the deductions.
- Tenant move-in – prior to the tenant occupying your rental unit, conduct an inspection to check the property details. Maybe there are existing damages that a tenant must not be charged for. Have the damages fixed before a tenant moves in. Support your inspection with clear photos and videos.
- Tenant move-out – once the lease expires, walkthrough the property and assess if there are property damages. This is where the initial documentation can support any repair costs that are deducted from the security deposit. This method prevents disagreements.
As a first time landlord, managing people and the rental property can be challenging. Additionally, building skills and knowledge might prove to be overwhelming for you.
If this is the case, consider hiring a property manager. At Pinnacle Property Management, our property managers are here for you. Contact us today at (310) 530 0606 for more information.