Doing anything for the first time usually comes with a learning curve, and becoming a landlord is no exception. In fact, it can be exceptionally tough because there’s no formal training.
With other professions, you might go to college or attend a program. Or you might work for someone else to learn the ropes for several years. But there aren’t any specialty training programs for becoming a landlord. The way people learn this job is by jumping in and doing what needs to be done.
However, you can follow some of the advice below that many seasoned professionals in this business found out the hard way.
Screen every applicant thoroughly
As a new landlord, it might be tempting to rent to the first applicant who comes along without doing a thorough background check first. But making this mistake can wreck your business faster than anything else.
Set up strict criteria for renters and do a free tenant screening on every applicant. This criteria can include things like a minimum credit score and income, along with good references. It doesn’t always ensure that you’ll have perfect renters, but it definitely helps minimize the risk.
You absolutely have a right to be picky when it comes to finding renters. They should show they are responsible enough to pay their bills and make enough money to do so.
However, the Fair Housing Act states that you can’t discriminate against tenants based on things like race, disability, or familial status. Make sure none of your criteria fall into any legally protected categories.
Find a mentor
Getting sound advice from successful people in your field is a good idea for any entrepreneur. They can help you avoid potential disasters by letting you learn from their mistakes, and they can give you a solid foundation in the business. You might think that finding a mentor is difficult in this business — after all, you’re the competition.
But entrepreneurs are typically willing to help others out and offer sound advice. If you do have trouble, you can always get online and see if you can find some social media groups with like-minded business people in it. Those are often great places to hang out and pick the brains of people with more experience.
Know the laws
As a landlord, you have certain obligations to your tenants. For example, while you have a right to collect a security deposit, your state has specific laws that govern that deposit. Some states limit the amount of the deposit and govern where you keep it. Others just specify how much time you have to return it once the renter has moved out.
Either way, it’s important to check your state laws and be clear about the terms from the very beginning. Other laws that cover the landlord-tenant relationship include the care and maintenance of the property, move-in dates, disclosures, and eviction processes.
Create a good lease agreement
Having everything in writing is one of the most important things you can do in your business. A good lease agreement will help protect your investment and ensure that your tenants are clear about expectations. You can find plenty of forms to download online; just make sure it has several key elements.
First, it should cover the length of the lease (six months to a year is common). Secondly, it should state the due date for the rent and any late payments they’ll incur should they miss that date. Other things to include in the lease are the location of the property, security deposit procedures, pet policies, and who is responsible for specific repairs.
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