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If you’re thinking of taking the plunge into real estate and becoming a landlord, then there are a few steps you need to go through first, and several things you need to consider.
More Than Rent Collecting
It’s not all about sitting back and watching the pennies pile up. There is a lot of work that goes into being a landlord.
Finding the Right Property
If you know who you want to rent to, it helps to narrow down the location and type of house you’re looking for. If, for example, you’re thinking of renting to students, then you’ll need a property close to where they’re studying, as well as having many bedrooms and a big communal area. They are also likely to need the house fully furnished too. If, on the other hand, you want to rent to a family, they’ll need plenty of room, but may not need as much furniture. They’re likely to want a nicer area than students might.
Furnishing the Property
Many properties are partly furnished or furnished, as you can charge a higher rent this way. If you’re planning on furnishing the property, remember that you’re not reflecting your own personality. Instead purchase furniture that allows tenants to express their own individuality. You may find it easier to purchase furniture packages that include everything you might need to complete your property.
Agency or DIY
If you plan on doing the landlord-ing yourself, then you need to find and veto tenants, answer any of the queries, problems or issues that your tenants might have, organize maintenance, resolve any disputes, etc. It can become more of a burden than you first anticipated. However, when things are good, it can be a very rewarding experience as you get to deal with tenants directly.
You could, alternatively, hire a property management agency and have them do everything for you. They charge a fee, and sometimes even an ongoing percentage of the rent. If you plan on employing a property management company, you should make sure that you know what is involved in the costs.
There are laws and regulations that you must follow if you want to become a landlord.
- The Fair Housing Laws prevent discrimination because of race, religion, sex, disability or familial status, when renting, selling and even mortgage lending.
- You must protect your tenant’s security deposit and it must be handled in a certain way. This law differs depending on what state you’re in, so check and make sure you’re not breaking it.
- Housing safety and health codes dictate what you must adhere to with regards to things like smoke detectors, working plumbing, etc.
- If you need to evict a tenant then there are certain procedures you must follow.
Your Responsibility to Your Tenants
- Ensuring the house is in a state of repair. This means making sure that the property is acceptable when tenants move in, and responding to any reports of disrepair or maintenance work in a timely manner.
- You should also make sure that the tenants feel safe in the property, it will be their home, so ensuring security is high on your list of priorities is essential.
- Advice renters insurance. You cannot make tenants pay for insurance, but make sure that they know it is available to them, in case of fire or flood.