Investing in real estate is not only lucrative, but it’s also a great way to diversify your portfolio. Because people will always need a place to live, owning rental property is a smart move, especially in a location where people want to live. Being a landlord for the first time can be challenging; however, being a good one helps you attract and retain tenants. Consider these essential tips.
1. Take a Business-Minded Approach
Managing a property may not be your main or only profession, but you’re in this business to make money. Profitability is the priority, and you’ll need to make sure that you’ve done your due diligence when it comes to being a landlord. This includes determining a lease price that generates a profit, documenting everything, knowing local laws and requirements, screening tenants carefully, securing landlord insurance, maintaining your property, and developing a friendly, yet professional relationship with tenants.
2. Prioritize Safety
As a landlord, you have a responsibility to make sure your property is safe for tenants. Consider creating a landlord checklist or cheat sheet for safety in your rental home, regarding the following:
- Structural integrity including foundation, roof, walls, ceilings, and floors
- Building infrastructure, including wiring, plumbing, HVAC systems
- Door locks, window openings, and security
- Pest and vermin control
- Environmental concerns such as lead, asbestos, and mold
You should know the status of these checks before entering into a lease agreement with a tenant. You’ll need a regular plan for staying on top of these issues. Boost a comprehensive maintenance approach with a solid insurance plan to help manage your risks.
3. Find the Right Tenants
Success as a landlord means finding tenants that will pay rent on time, take care of their part of their property, and follow other terms in the lease agreement. Screening tenants properly is one of the most crucial duties that you’ll have as a landlord. Be thorough when it comes to evaluating a potential renter’s history for credit, employment, and evictions. Ask for references and verify any information that an applicant provides. Even a face-to-face meeting can provide insight as to how a tenant will treat your property and lease agreement. Don’t ignore red flags such as dishonesty or a rush to start a lease. Consider using a landlord checklist for tenant screening to make sure you’ve covered all your bases.
4. Put It in Writing
As a new landlord, you may be tempted to agree to things verbally, especially with what seems like a good tenant or vendor. Avoid conducting transactions without a signed lease agreement in hand, even if the tenant is someone you know. It behooves all parties to have things in writing, protecting your interests as a landlord and that of your tenant. The same is true for any arrangements you may have with vendors such as a landscape contractor or employees such as a property manager. Documenting everything can help to quickly resolve disputes with others.
5. Set the Right Price
You’re in this to make money. Your rental price needs to be fair, but also enough for you to turn a profit. Think about what it costs you each month to own the rental property. This should include the mortgage principal and interest, property taxes, landlord insurance, utilities, HOA fees, and maintenance. Your rental price is critical in attracting tenants, so it’s important to find a price that is reasonable and profitable. Be sure to request the first and last month’s rent upfront as well as a security deposit.
Finding success in real estate investment involves being a good landlord. If you’re contemplating becoming a landlord, make sure you’ve taken care of all of the essential details. Contact us at 800-644-6443 to get started on exploring insurance options for landlords in California.
