If you want to break into the real estate market, most professionals will suggest starting with a rental property. Rental properties generate some of the highest returns in the real estate business, making them one of the most lucrative investments. Whether you plan for your rental being a primary source of income or just a side hustle, there are some important aspects of being a landlord that you should be aware of.
Marketing
Now that you’ve purchased your property, it’s time to get the word out that you have a home or unit(s) available. When it comes to real estate, digital marketing is king. While a sign in the front yard won’t hurt, it’s not enough to properly market your rental. Consider using online resources such as zillow.com, apartments.com, and even Craigslist. The bulk of apartment hunters look online to find their next residence, so don’t miss out on your biggest audience of potential renters. Looking down the road, if you’re rental business ever becomes large enough, consider hiring a digital marketing firm to ensure that your webpage and properties are at the top of every search engine result.
Screening Tenants
Getting stuck with bad tenants is a landlord’s worst nightmare. The eviction process is lengthy, expensive and stressful—which is why it’s so important to get the right occupants the first time around. Make sure to notify all potential tenants in your advertisements that they will need to agree to a background check; any applicant worried about their credit or criminal history likely won’t bother applying. During the lease renewal process, it’s a good idea to do a second background check if you have any suspicion of criminal activity in regards to your current tenant.
Managing Your Property
There is a long list of responsibilities when you’re a landlord and even new properties can require a great deal of attendance or maintenance. Unless you want to handle repair requests, applications, and rent collections yourself, you should consider hiring a professional property manager. If your property is small enough, such as a two-bedroom home, a manager might be excessive. However, multi-unit complexes and large apartment buildings most certainly require some degree of staffing. While your property is empty, it may be a good idea to hire home guardians who can ensure that the property is safe and tidy.
Repairs
There’s no getting around the fact that your property is going to need repairs sooner or later. If you’re starting out small, hire a handyman or contractor for individual tasks as they arise; there won’t be any need for a full-time position until you have built your business up. As soon as a tenant makes a request for a repair, it’s incredibly important that you attend to the problem as soon as possible. Failing to fix broken showers or light fixtures in a timely manner will only upset your occupants and set you up for potential legal problems.
Pets
Almost 70% of American families own some kind of pet. While it might seem like a bad idea to allow your tenants’ fury friends to occupy your units, you could be missing out on your largest market of renters. Concerned with the potential damage to your property? Simply charge your tenant a pet deposit and additional rent to cover any potential damages that pop up; applicants with pets usually expect the requirement of an additional payment and deposit for their pet(s).
Use Online Resources
From rent collections to applications, everything should be handled online. Consider using a property managing software and set up notifications to you or your property manager’s phone so that messages and requests from occupants are dealt with immediately. There are a handful of real estate websites at your disposal, as well. Cozy.co and turbotenant.com will make paying rent online easy.
Discrimination Clauses
It’s important to protect yourself from any accusations of discrimination when searching for new tenants. To avoid such claims, conduct a phone interview and have a potential tenant fill out an application—making sure they submit to a background check—before you meet with them in person for a tour of the property. Once you meet with an applicant in person and deny their application, your chances of being sued for discrimination drastically increase. Be cautious of scammers who take advantage of these laws in order to exploit rental business.
Use this helpful information to successfully run and operate your first rental business and you could be raking in the profits of a landlord in no time.