If you happen to own property that you have rented out (or are planning to rent out), then you have come to the right place! For any property owner, it is important to master the art of being a successful landlord.
First things first, being a successful landlord is not just about buying an investment property, renting it out, and receiving the agreed amount every month. A successful landlord is much more than that.
10 Simple Steps to Becoming a Successful Landlord
1. Develop an attitude towards being a successful landlord.
It is important to understand that successful landlords take their real estate as an investment. They always take great pain in the acquisition of properties, placement of tenants, and management of their existing properties. This places a huge demand on a successful landlord to work hard and ensure that his/her properties remain up to date and attractive for prospective tenants. You need to develop an attitude to handle diverse situations and demands placed by your real estate investment.
2. Take your real estate rental as a business and develop it accordingly.
Successful landlords take their real estate as a serious investment (and not a dormant source of monthly income). Regardless of how many properties you own, it is important to develop a system to run it smoothly. The system must ensure that your properties are well maintained and run in profit. It may as well mean outsourcing and dealing with tenants firmly. It also involves proper accounting and bookkeeping of all the expenses and income to ensure that you always have a positive cash flow.
3. Make solid foundations before you rent out your property.
Every business has laws and rules associated with it. Property renting is no exception. A successful landlord must know all such laws and rules. All successful landlords buy appropriate insurances, ensure asset protection, and set up an exclusive rental property account. All these must be in place before you go on to rent out a property (or even meet any interested tenants). This will simplify the process and save you from loads of hassles at a later stage.
4. Research and prepare to be a successful landlord.
Inspect the neighborhood thoroughly and get to know your tenants’ future neighbors. It is imperative to have good relations with your neighbors when you rent out a property. They will help you in receiving any reports about unlawful or unjustified use of your rental property by any tenant.
It is also important to prepare your house in the best possible condition to attract good quality tenants. You must research and assess the demanded rent as per local market and ask accordingly. If your rental rate is too high, it can be counterproductive and minimize the occupancy rates.
Related: How Much Should I Charge for Rent?
5. It is extremely important to know and understand fair housing laws.
There are strict federal, local and state laws that prohibit any discrimination against a certain protected class of people. Such discrimination can be on the base of color, race, religion, ethnicity, marital status, disability or any class of people protected by local or state laws. Be mindful of the language that you use in communicating with prospective tenants. Violating fair housing laws can result in hefty fines (or even jail sentences).
6. Marketing is the key to becoming a successful landlord.
Just like any other business, landing good deals and finding tenants must not be left to good chance or luck. The key remains in smart marketing of your rental real estate. Nice tenants are not easy to find, nor are they difficult to get. It simply depends on how eagerly you look for them. A successful landlord would use all the marketing means to get in touch with the right tenant. Modern marketing means like social media and local newspapers can be a very useful and effective mean in finding great tenants. Spreading the word of mouth in the local community can also prove to be very helpful.
7. Screen the tenants thoroughly before you decide to rent your property.
As soon as your rental property is ready, you will start getting contacted by interested tenants. It is critical to evaluate each tenant carefully before the final deal. Your tenant screening process should start with advertising and remain functional all along. It is smarter to document the pre-qualifications for tenants and it should form the basis of your tenant screening process. It will also help in eliminating those who don’t meet the pre-conditions. In every meeting with prospective tenants, you should have prepared a list of questions to have a better understanding of their credibility and suitability.
8. Prepare a template to be filled by the shortlisted tenants.
After having screened and shortlisted the desirable tenants, you must have an application template to be filled by the shortlisted tenants. The template may include information about credit history, criminal record, any previous tenancy history and details related to financial credibility. These details will help you in deciding who is the best possible match for your real estate rental property.
9. Prepare a thorough lease deed.
A rental agreement between a tenant and landlord is a critical document for all future interactions. It is extremely important to prepare an all-encompassing lease deed to ensure fairness for both the tenant and the landlord. A court of law would refer to rent agreement/lease deed in case of any litigation at a later stage. Be sure of the completeness of the lease deed (and its signing) by both parties as per local and state laws.
10. Be organized and respond to tenant requests in time.
Where it is essential for a tenant to pay rent on time and abide by the lease agreement clauses, it is also mandatory for you to effectively (and timely) respond to his/her problems. In practical terms, it would mean proper and efficient management of properties, the rectification of any structural issues, and communicating with tenants compassionately. All these are critical for a healthy landlord-tenant relationship and even to ensure you are following the landlord-tenant laws.
These are some of the steps to becoming a successful landlord. It is imperative to understand that, being a successful landlord cannot be left to chance. You have to work to make money as a landlord. There are no short cuts.