Being a landlord is one of the most rewarding and fun experiences, but it should never be taken lightly. If you’re interested in owning a rental property, here are some things to know as a first-time landlord.
Have a written tenancy agreement
If you are a first-time landlord thinking about buying a property to rent out, or already have one, you should make sure that you have a written tenancy agreement for your residential tenants. Writing an agreement with your tenant and following all the steps is the best way to avoid problems later on and help you protect your legal interests.
Rental or lease agreements are required to make property rental legal. A tenancy agreement is a binding contract that regulates the terms and conditions of living in the rental property for both you as the owner and the tenant as the renter.
The tenancy must have proof of payment, a description of the place and any conditions and responsibilities that go with the agreement. A proper and formal rental agreement is not just for landlords—tenants should have a copy as well.
Carefully screen tenants
One thing you have to decide before you start renting out your home is who you will accept as a tenant. There are many reasons why this is difficult, but after all, you have to make sure your investment and property are safe. The biggest reason for doing this is that you are required to by law.
By being selective in the type of person you allow into your property, there is a better chance that the tenancy will be positive for both parties involved, and therefore, it can lead to long.
As well as all the usual prospective tenant background checks, make sure prospective renters can prove they will be able to pay the rent. It’s your responsibility to check their references and credit score so you can be sure about their income stability and reliability.
Don’t let the pressure of time and need for capital force you into a rush. The rental market is particularly competitive, so make sure you’re getting the best tenant you can.
Get landlord insurance
As a first-time landlord, you may be tempted to take the cheaper option and not add landlord insurance to your list of things that need doing when you’re buying your property. This could be a big mistake if something happens to your property or the belongings in it.
Landlord insurance covers landlords for many things, for example against damage caused by tenants and their guests, and also covers certain sums on outstanding rent should this not be paid more than 21 days after it is due. Generally, landlord insurance is designed to help protect the landlord against the risks associated with owning a rental property.
Streamline rent collection
When you’re just starting out as a landlord, it can be easy to put collecting your tenants’ rent at the bottom of your list of priorities. However, collecting rent on time from reliable tenants is a vital revenue stream that helps protect your rental property against future financial troubles.
One of the most common problems first time landlords probably encountered as they get started with managing their property is unpaid rent. There are ways to avoid this issue and some cases where you can force a tenant to pay their unpaid rent or face eviction.
There are a few simple suggestions for how first-time landlords can make rent collection easy, and ensure that they don’t receive bad checks in the mail six months down the road.
For example, if you manage your property yourself, you can have the bank set up a direct deposit account for the tenant. Make sure your tenant puts the money in your bank account, rather than in his or her own. You incur no fees by doing this.
Knowing what to expect as a first-time landlord can help you feel prepared and confident when meeting with tenants for the first time. Follow the tips in this article, and you will be on your way to becoming a successful landlord in no time.
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