There are many reasons to become a landlord. You may be upsizing your home and choosing to rent out the old one. You may be interested in the constant stream of income that renting offers. You may be attracted to the tax benefits. No matter your reason, this role can be an exciting and lucrative opportunity for many individuals.
However, it comes with a great deal of responsibility.
As a landlord, you will be running an active business, managing tenants, and keeping the properties in top condition. So, before you take on this responsibility, it’s important to understand exactly what you’re getting into. This guide will provide some basic factors to consider before taking the leap into renting as your full time job or side hustle.
Time and financial commitment
While rental properties offer passive income, it still takes work to maintain the logistics of your business. You will be spending time communicating with tenants, fulfilling maintenance requests, organizing paperwork, listing properties, vetting rental applications, and ensuring general building and tenant compliance. To save time, some landlords will use free landlord software to post rental units. You may also choose to hire a property manager to manage these details for you.
Whether you approach this role alone or work with a property manager, you will take on the associated financial responsibility. These expenses include insurance, maintenance expenses, and home office cost. You will also need to cover mortgage payments even when the unit is vacant. Whether working with a credit union in Slidell, LA or large bank in New York, be sure to set up a meeting with your banker to open accounts and set aside startup costs.
By having enough financial stability to keep up with expenses and maintain properties, you can stay in compliance with local regulations and keep your tenants satisfied with their living conditions.
Local and state laws
As an aspiring landlord, it’s essential to be well versed on laws applying to landlords and tenants. State and local laws and regulations ensure that you pay all associated fees, properly handle rental applications, and ensure that the rental properties are livable. Remember that most of these laws are in place to protect tenants, so you can face fines or even jail time for violating them.
With so many landlord tenant laws, it may be wise to take a class or seek professional legal advice before you start renting. This way, you will be aware of how to avoid legal mishaps. It also pays to have a lawyer, so you can seek legal help when conflicts or issues arise.
Once you understand the financial, time, and legal responsibilities of being a landlord, you will need to prepare to handle tenant relations. From the moment they sign their lease, you have an opportunity to build a relationship with the tenant. However, you will also need to handle conflicts when problems arrive. For example, if a tenant doesn’t pay their rent one month, you will need to confront the tenant and collect associated fees.
The same principle applies if a tenant violates a lease in any way, like keeping pets in the unit when they are not allowed. You will also need to be ready to approach legal issues like eviction, so it’s best to keep open communication with tenants and have a lawyer to assist you. By staying reachable and handling lease issues in a business-like manner, you can resolve any problems in a professional manner.
Becoming a landlord is a large responsibility, full off logistics, laws, and time obligations. This is why it’s essential to do your research before renting out a property. By doing so, you can be prepared to give your tenants the best possible experience and continue collecting this income for as long as you choose.