If you are considering being a landlord, you first need to consider many things.
You need to understand your legal obligations, determine what permissions to include in your contract, and know how to screen potential tenants to find the right ones, to name just a few.
Let us explore some of the key things you need to know about being a landlord in more detail.
If you are purchasing a property to rent out, you need to be aware of zoning laws before you buy.
In basic terms, zoning laws ensure residential and commercial areas are kept separate. So, research local zoning laws for properties you are interested in to find out whether they will affect your ability to rent.
Landlord Insurance Policies
The next thing you need to know is: what is landlord insurance?
Quite simply, when you take out a landlord insurance policy, you are covered for a wide variety of risks that can come from renting out a property, such as theft, property damage, and non-payment of rent.
Like home insurance, you can get coverage for a number of different things, so be sure to compare different insurers and policies to find the coverage that is best for your specific needs.
Landlord-tenant laws ensure both landlords and tenants are legally protected.
In the U.S., each state’s rules vary slightly, but in general, there are five basic legal obligations that landlords must follow.
Firstly, landlords have the right to charge tenants security deposits. Legally, the deposit does not belong to you, but it is a source of security should your tenants breach the lease agreement. Some states have maximum amounts you can charge for security deposits and specific rules about storing deposits.
Secondly, as a landlord, you must legally disclose certain information to your tenants, such as the names and contact information of people who manage the rental property, make repairs, handle complaints, and so on.
Next, you must deliver the tenant with possession of the unit, meaning the rental space must be vacant on the arranged move-in date.
The last two legal responsibilities under landlord-tenant laws are being responsible for the maintenance of the property, to ensure it is safe, clean, and habitable, and adhering to the conditions of the lease agreement.
Residential Lease Agreements
As a landlord, you need to have a lease agreement. It will help to protect you from liability, prevent conflicts and confusion between you and your tenants, set out procedures for notices and evictions, and much more.
Like landlord insurance, pay attention to exactly what you want to be included in your residential lease agreement.
The types of permissions you include in the contract can refer to things like whether you will allow tenants to keep pets, smoke in the property, or make improvements to the property.
Even with all the right legal infrastructure in place, you still need to find tenants who are suitable. Here you find some strategies that may help you for finding qualified tenants.
That means taking tenants who are reliable at paying their rent on time and taking good care of the property.
To help you make sure you get reliable tenants, it is a good idea to perform a credit and background check on any potential residents.
Look for red flags like undue payments, significant debt, bankruptcy filings, and prior evictions, to filter the suitable tenants from the unsuitable ones.
Yes, there is a lot to think about and do before you can become a landlord if you want the venture to be successful. But do not let that put you off.
You can receive a decent income from a rental property. Just make sure you follow all the legal obligations, get insurance, sign a contract, and screen potential tenants.