Buying property can often be a very smart investment. If you have bought a second property and plan to rent it out, this can be a great way to begin a property business or to just earn some extra money. Whether you’re renting your main home while you work away for a year, or are starting to build a property portfolio, there’s a lot to learn.
Here are some top tips for first-time landlords.
1. Learn about the market
The property market is always changing, so stay informed. Read property news and blogs like the Brothers Buy Homes Blog, to keep up with changing trends, regulations, and other changes in the industry.
2. Make rent the priority
Rent is your income. Many landlords can be quite lax about chasing late rent or charging late fees. While it’s good to work with a tenant who may need help, they need to communicate with you.
If they reach out to let you know they have lost their job, you can help, but a tenant who doesn’t pay and begins to ignore your attempts to contact them is bad news. Start eviction proceedings by sending an eviction notice first, or you could end up with months of unpaid rent.
3. Partner with the right investor
You need a good business partner who is honest and transparent. Both of these qualities are critical for good business. Some new landlords make the mistakes of partnering with someone they don’t know well in order to get a good deal, but this can backfire badly.
Partner with someone you know and you can trust. Make sure you have the same end-goal values before deciding to invest in property with someone.
4. Always screen tenants properly
Screening tenants is very important, but it is easy to make mistakes in this area. Good thing that an online platform such as tenant referencing is now available to make the selection faster and efficient.
Check credit ratings, get a reference, and ask for proof of employment. Learn what different credit scores mean so you can make an informed decision. Poor credit is a score of below 600. Don’t rent to someone with poor credit, who cannot produce references.
You need to know you are renting to someone who can, and will, pay every month, and treat your property with respect.
5. Be careful allowing pets
Lots of renters really want to bring a pet into the property and if they are a tenant in good standing, it can be tempting to agree.
However, many landlords have had very bad experiences doing this, so it’s wise to be hesitant. A pet like a dog or a cat can do a lot of damage to a property, whether through scratching, chewing, or leaving behind unpleasant odors. The damage done by a pet can be very costly to put right.
If you trust your tenant, you could agree to allow pets, but set limits, such as only one small dog, and ask for an extra deposit to cover the cost of potential damage.
Get this agreement added to your contract so you are both protected in case something goes wrong after your generous agreement.