You might think you’re ready to become a landlord, but learning how to be one by trial and error is not necessarily the best way.
Here are tips to consider before you take the plunge.
1. Ideally, you want to live near your rental property
That way, you can check on it periodically (after giving your tenants proper notice), take care of repairs yourself, and show the property when it’s time to re-rent it.
2. Know landlord-tenant law
Most states have specific landlord-tenant provisions that cover issues such as security deposits, what sort of access to your rental property you can expect to have, and how much notice you need to give your tenants when you want them to leave. There also are federal laws you need to know, such as habitability and anti-discrimination laws.
Fair housing liability traps can arise in many ways, so it’s important that you fully understand the law and ensure that you aren’t breaking it.
3. Make sure you can enforce the rent being paid on time
This seems like a no-brainer, but believe me, if you get too friendly with your tenants, you might just let them slide a couple of weeks here and a partial payment there. Before you know it, your tenants are six months behind.
But that doesn’t mean you shouldn’t treat tenants with respect. Real estate consultant Elizabeth R. Elstien notes that “creating rapport shows respect and makes the job of collecting rents and dealing with repair requests that much easier.”
Casey Fleming, author of The Loan Guide: How to Get the Best Possible Mortgage, says it’s important to “have a thick skin” and advises people not to buy rental property if tenant shenanigans will “drive you crazy.”
4. Screen potential tenants
It’s worth the time to do a background and credit check on all potential tenants. I use an online tenant-screening service for this. Credit score alone is not always a reason to accept or deny an applicant, but it is a useful screening tool. You should also conduct an interview and check their references.
5. Customize the lease
If you don’t hire an attorney or a property manager, you can use a standard lease form from Nolo, for example, but you should tweak it to fit your situation. For example, if you allow pets, specify how many, what kind, and any rules that apply.
My lease states that tenants should leash their dogs when outside the fenced-in yard and stipulates that pets do not become a nuisance to neighbors.
6. Inspect the property regularly
Have language regarding inspections clearly written in your lease documents. Plan on inspections every three months. If you find problems issue a notice to comply and set another inspection in one week.
7. Understand this is not a get-rich-quick scheme
Being a landlord is not just sitting around collecting a big wad of cash each month. You’ll need to spend some money to ready the property for tenants, buy landlord insurance, and pay property taxes. If you’re taking out a mortgage, be prepared to fork over at least a 20 percent down payment.
We have a VAST inventory of available lease properties in Laguna Beach, Newport Beach, Dana Point, San Clemente and more added daily – check them out by clicking here or by contacting one of our specialists.
There’s no “right” answer to whether you should have a qualified Property Management Firm or not. Your desired flexibility, stability, lifestyle, responsibility readiness and other personal factors will paint a picture of which is the best choice for you. And we are happy to help you!
Please contact us to help you to sell your home and find the home of your dreams! We specialize in Laguna Beach, Newport Beach, Dana Point, San Clemente and our inland coastal communities.
Make it a great day!Jeff