Become a Landlord in 5 Steps or Less
In today’s housing market, single-family rentals are the most successful in the rental market. They’re moving faster than apartment buildings and first-time home purchases. This trend is only expected to continue to rise in the years ahead. If you’re interested in becoming a landlord and jumping into the single-family rental market, you’re likely thinking in terms of an income stream.
A great landlord, however, is also responsive to a tenant’s problems and concerns. Here’s our guide to becoming a landlord in just a few easy steps:
Step 1: Assess Your Financial Situation.
Acquiring a property will cost you quite a bit more than just the mortgage every month. While a tenant may be required to do the lawn work, any appliances that break, roots in the pipes, or bigger home issues are yours for the fixing. Also keep in mind that your tenant will eventually move onward, meaning the property may be without a renter for certain amounts of time, which is income you won’t be receiving.
When creating your plans, ensure that 10 months of rental income will cover the property’s annual mortgage, taxes and fees, and the potential repair total. Is your rental asking price still aligned with the going rate in your location?
Step 2: Check-In With your Patience and Flexibility
Your renters will likely be in different a financial bracket than you—if you’re considering investing in rental properties. They may lack the time, funds, and resources to keep the yard perfectly manicured or the new carpet as clean as you’d like. It’s important to remain patient and be flexible with your tenants and understand that their priorities on your property will be different than your own.
Remember the two mismatched friends in The Odd Couple? Granted, you won’t be living together but a tenant is living on a property you own. If your renter is Oscar Madison, can you summon up the self-control of Felix Unger? If not, it’s important to screen tenants and find a renter who won’t test your patience as others might.
Step 3. Plan Geographically
Is your rental property near your home? Can you get there if there’s an emergency, the tenant needs a repair, or to meet to discuss an important matter?
Pipes burst. Trees fall. People have emergencies every day, from private financial matters to appliances breaking in the worst weather conditions. Renters and neighbors will be more trusting and supportive if you’re able to show up when your presence is of the utmost importance.
Note: If you can’t be nearby, see Step 5 to make sure you have the right help in place for someone to be available instead.
Step 3. Research Law and Liability Factors
Townships publish their laws and legal codes online. You’ll find many provisions to meet as a landlord, including but not limited to:
- A waste hauling arrangement and refuse bins that meet the township’s standards
- Exterior and interior structural soundness, and mechanical fixtures in good working order
- Security and fire safety
- Landlord-tenant laws to meet and abide by
- And more!
In order to avoid unexpected legal costs, be sure to meet with your insurance agent and discuss your best options for optimal property and liability insurance. Working with a property manager can also be helpful if you’re just getting started, as they know all of the ins and outs of local laws and liabilities.
Step 4: Prepare a Lease
Before renting to a potential tenant, it’s a good idea to be sure the tenant can afford your property on your terms. Run a credit history and background check with the tenant’s signed approval, as the Fair Credit Reporting Act requires your prospective renter’s go-ahead to run these kinds of checks.
In your lease, be sure to clearly state the duty of the renter to pay timely rent, in full. Include your fees for late payment and the time limits. Also be sure to include your legal right to enforce all rules and expectations, as outlined in the lease. These should also refer renters to the landlord-tenant laws in your area.
Step 5: Consider Hiring a Property Manager
Not surprisingly, potential tenants may actually feel more comfortable calling a professional service to inquire about a rental, rather than having an individual landlord to work with. Using a property manager provides a larger network to reach out to when it’s time to pay rent, they need maintenance or services, or anything else property-related. A property manager will also take a lot of the day-to-day stress and communications off your plate so you can focus on your daily life or acquiring other rental properties. Overall, having a top-notch professional manage your properties can make your daily life that much easier.
That’s Why We’re Here
We’re here to help you be the best property investor and landlord you can be—whether you own one or multiple properties in the Tucson area. Be sure to contact us at Bancroft & Associates to discuss your property management options.