Introduction
When you are renting your house out or investing in a rental property, there are a lot of things to consider. Landlords are expected to know important state laws, inspections procedures, and more. Here are a few things you should know as a first-time landlord.
Conduct Property Inspections
One of the primary concerns every landlord should have is providing a safe and habitable home for their renters by complying with health, safety, and building codes.
Some of the things that each rental should have are safe electrical wiring; consistent essential services like running water, plumbing, and heat; and a stable infrastructure. Also, make sure that you have working smoke and carbon monoxide detectors in each unit, and keep an eye out for infestations of mold or pests.
Before you rent out a house, get inspections of the following systems from a professional:
- Electricity
- Hot water heating
- Plumbing
- Infrastructure like walls, roof, and ceilings
- HVAC system
Although professional inspections can get costly, so can court costs or lost rent payments from tenants who experience uninhabitable conditions. Identifying potential hazards before they happen is the best way to avoid future liability.
Acquire Landlord Insurance
On the note of court costs, landlord insurance can help you if you do end up in a court battle with a client. Legal liability is usually an aspect of your insurance policy, as is tenant property damage, damage from natural disasters, or any other large financial loss you incur from renting out house rooms or the property as a whole.
Even if you have landlord insurance, you must ensure that your tenants also have renters’ insurance. Their insurance policies will cover any potential damage to their belongings or personal liabilities.
Some people see insurance as useless because there’s a chance you will never use it. However, when you’re a landlord, it’s almost certain that an unexpected financial cost will arise at some point in your career. Having landlord insurance is a small monthly cost for what could be a massive loss due to unexpected damage.
Review Your State’s Landlord-Tenant Laws
Each state has varying landlord-tenant laws, and it’s your responsibility to know them. Not knowing the law is not an excuse for violating it, and doing so could force you to pay with not only your time and money, but also with your reputation as a good landlord.
State statutes generally have rules dictating the following:
- Rent increases
- Grace periods, late fees, and application fees
- Fair Housing Protections Additions
- Entry
- Required Notices
- Security Deposits
Draft Your Lease Agreement
It’s imperative that you always have a written lease agreement with your tenants. Although oral agreements do exist, written leases cover more liability, and serve as a reference for both you and your tenant regarding the policies you agreed on and the responsibilities you both have. Also, if you have to evict a tenant, having a written lease will help speed up the process and give you the strongest chance at being able to remove them as quickly as possible.
You should consider downloading a lease template for your state, since writing your own lease can be somewhat complex. Here is a checklist for landlords of the minimum requirements for your lease agreement:
- The names of both parties
- The lease start and end dates
- The address of the rental property and included areas, like yards, sheds, garages, etc.
- The monthly rental amount
- The security deposit amount
- Utilities included in the rent, along with any amenities
- Policies for each of the following:
- Late fees
- Grace periods
- Guests
- Pets
- Early termination of the lease
- Subletting/subleasing
- Any additional property rules and lease conditions
Screen Tenants
Screen your tenants to avoid inconsistent payments, damage, and potential fraud. A bad tenant could force you into financial and legal distress, so it’s important that you screen each applicant thoroughly.
Make sure that each applicant undergoes credit, criminal, and evictions history checks. When doing so, make sure that you follow your state’s rules regarding how to conduct these checks fairly.
You should also ask for proof of income, and references from employers and past landlords.
Research Quality Property Management Software
Good property management software allows you and your tenants to set up online rent collection, which is a great way to ensure that you get your rent payments in full and on time. Tenants can opt-in to automatic rent payments, which reduces the likelihood that they simply forget to pay on time.
Property management software will make many of the tasks above much easier. Tenant screening, security deposit collection, and purchasing landlord insurance, are made simpler and easier with software platforms like Innago. Research the best software for you and your business to reduce the stress of many day-to-day landlord tasks.
Conclusion
Even landlords with years of experience can struggle to keep track of all the relevant tasks and responsibilities of their position. As a new landlord, you likely feel that everything is overwhelming. However, by following the tips above, following state laws regarding your responsibilities as a landlord, and consistently trying to do what’s best for your property and tenants, you will be in good shape.
