Did you just buy your first rental unit or convert one into a rental? If so, you must be feeling great. After all, you’ve now set yourself up for earning extra income and developing your net worth. The satisfaction of earning passive income from an asset that appreciates in value is hard to beat.
With that being said, being a landlord comes with plenty of responsibilities. It can be stressful, time-consuming, and even intimidating, especially if it's your first time being a landlord.
The key to a stress-free experience as a landlord comes from setting yourself up for success through rigorous planning and smart decisions from the outset.
Using this guide, you'll be able to simplify the tasks associated with renting out your investment property, whether you're thinking of turning your home into a rental property or if you've acquired new property for that purpose.
How to Succeed as a Landlord
Do Your Research
It sounds pretty straight-forward. However, you’d be shocked by how many first-time landlords disregard conducting extensive research of the local rental market.
If you’re a novice in the real estate investing world, it's vitally important to learn as much about real estate as possible, whether you're investing locally or buying an out-of-state property.
Proper research is particularly important when you're deciding which kind of investment house to purchase. Sure, fixer uppers usually have lower upfront expenses—sometimes up to 80% off the original price—but most will require significant repairs to be rent-ready.
If you have no prior experience fixing up rentals to get them ready for the market, you may be better off buying a rent-ready one.
You also need to be sure that you’re investing in the right location. In fact, the right location can make or break your investment. The right location is one that has attractive amenities, safe streets, and good schools among, other a number of other features that are important to prospective renters.
Have a Business Mindset
Another essential tip for a first-time landlord is to buy an investment with a business mindset. As hard as it may be, you’ll need to make a clear distinction between a business and an emotional move.
While you may want to work things out with a struggling tenant, for example, you’ll also need to set clear boundaries by enforcing the lease terms. You'll need to be prepared to enforce late fees so as to discourage late rent payments from tenants in the future.
After all, missing rental income can have a negative ripple effect that impacts your property management business in various ways.
Besides strictly enforcing the lease agreement terms, you’ll also want to keep tabs on your expenses. Not only are there costs landlords may not notice they're accruing, but it's important to plan for bigger expenses.
One huge expense for landlords comes in the form of property taxes.
Unbeknownst to many beginner landlords, there are dozens of tax deductions that may be available to them. So, make sure to hire a good accountant to help you take maximum advantage of the tax breaks that may be available to you as a landlord.
You may also want to avoid renting your rental to friends and family. While finding great potential tenants can sometimes prove to be an uphill task, renting to friends and family can turn out to be counterproductive, as you'll find yourself in touchy situations where you can't act freely.
Learn How to Manage Your Property
Property management isn’t for everyone, and it isn’t just about collecting rent at the end of the month. And not every wants to be a full-time landlord, whether you have another job or other responsibilities. To thrive as a landlord, among other things, you need to:
Understand your state’s tenancy laws. Every state has landlord-tenant laws that highlight each party’s rights and responsibilities. Failure to understand Nevada's fair housing policies can be a recipe for unending issues with your tenants, not to mention costly and time-consuming legal troubles.
Have a rent collection plan. You need to provide your tenants with easy, convenient payment solutions. For instance, an online payment portal.
Screen tenants effectively. Having responsible, quality tenants can be the difference between property ownership bliss and never ending struggle. You need to have a screening process in place to ensure you minimize your chances of landing difficult tenants. If welcoming pets, make sure to perfom effective pet screening too.
Market vacant properties quickly. Every day that your property sits vacant is money down the drain. Having a marketing strategy in place and writing great property listings can help ensure speedy turnaround between tenants.
If you lack prior experience handling these tasks, hiring a property management company may be the best option for you. A good property management company can help you fill your vacancies faster with the best available local tenants.
They can also help take care of your property for you through regular inspections and quick responses to tenant maintenance requests.
Form a Pet Policy
This is an important decision that you’ll have to make as a landlord. There are a lot of risks associated with allowing pets into a rental property such as property damage and noise complaints.
Luckily, there are some things you can do to offset those risks. You can, for instance, require tenants with pets to pay you a pet deposit separate from their security deposit. Furthermore, you could also come up with pet clauses that mention:
- Types of pets allowed.
- Size of pets allowed.
- Number of pets allowed.
Allowing pets into your rental property can give it an advantage from the competition, considering that America is a nation of pet lovers. If you're properly protected from the risks that pets pose, you'll have an advantage over landlords who prohibit pets altogether.
Insure Your Rental Property
Similar to a homeowners' insurance, landlord insurance helps to protect a dwelling against potential liabilities.
Of course, you'll want to prepare your property for winter and implement additional measures to protect it, but it's always best to err on the side of caution and get landlord insurance.
Common liabilities covered by a landlord policy include:
- Loss of rental income. Your losses may be covered in the event you’re unable to rent your house, or if your property gets damaged in a covered event.
- Medical coverage. If someone is injured while on your rental property, they may sue you. A landlord’s policy may be able to cover the ensuing liabilities.
- Property damage. If elements such as snow, hail, wind, or fire damage your property, you may be able to get compensation for it.
You’ll also want to require prospective tenants to have renters insurance prior to lease signing as well. A renter's insurance policy helps to protect tenant belongings against damage caused by fire and theft, for example.
The last thing you want as a landlord is to scramble to locate emails or paperwork when looking for something. That can be a recipe for constant headache.
To keep things organized, create a digital paper trail, archive all events and paperwork, and consider hiring an accountant. Keep your communication with tenants in writing and consider sending move-out letters. There is also plenty of effective property management software available to help you manage your property.
The Bottom Line
There you have it. Using the above six essential tips for first-time landlords, you'll be able to get your career as a landlord off on the right foot, putting yourself on the path towards earning a great return on a real estate invesment in the Reno area.
Do you need more help with your rental property? If so, Evolve Nevada can help. We have been in the property management scene for well over 20 years and have proven experience helping our clients meet the goals they've set for their rental properties.