The first time you start managing rental properties, it doesn’t take long to realize you have some complex responsibilities. Not knowing where to start can make you feel overwhelmed, so here are some tips for first-time landlords that cover everything from leases and pets to evictions and tenant screening.
1. Hire a property manager
Hiring a property manager from the beginning is wise. It will eliminate the uncertainty you feel when wondering if you’re doing everything right. Professional property management companies provide real estate investors with expertise that would otherwise take decades to acquire.
For instance, Green Residential in Houston, Texas has a team of experts with decades of combined experience in the industry. They’ve earned a reputation for managing tenants with respect and professionalism while adhering to state and federal landlord-tenant laws.
To make your life easier, hire a professional team to manage your landlord duties. Unless you love the idea of being a landlord, this is a good move.
2. Pay close attention to habitabilit
All property owners are required to ensure their units are habitable, which means no mold or mildew, rodents, insects, or other major issues that can make your property unlivable. You’re also required to provide heat in some form for your tenants.
If you become aware of these types of issues, take care of them immediately because your tenant can sue you otherwise.
3. Become familiar with the Americans with Disabilities Act (ADA)
The ADA sets forth laws that govern the rights of tenants with disabilities. It’s important to adhere to these laws to the letter. For example, it’s unlawful to refuse a reasonable accommodation for a disabled tenant who rightfully makes the request. Reasonable requests might include asking to move to a downstairs unit, requesting a closer, reserved parking space, adjusting the date rent is due, and adding grab bars in the bathroom.
4. Don’t rent to friends and family
This is advice that will save you a lot of stress and heartache. Avoid renting to your friends and family members whenever possible. If someone can’t find anywhere else to live, help them find a place before renting to them.
When someone close to you is your tenant, they will expect favors and won’t be likely to pay late fees or follow all the rules.
5. Always charge market rent
If you start giving people discounts and don’t raise the rent periodically, you’re shorting yourself of deserved income. You bought rental property to make money, not to be a charity.
Say you have a long-term tenant and haven’t raised the rent in ten years. When you finally decide to start raising the rent, you’ll have to do it in small increments potentially for years just to catch up to the current market rate. Your tenant won’t like the change, either. The longer you give people breaks, the more entitled they feel and they will resist even the smallest changes.
6. Always check references
You might be tempted to rent to someone you really like without bothering to check references. If you’re a good judge of character, this might seem okay. However, it’s extremely risky. Some people are professional tenants and are really good actors.
7. Maintain high rental standards
Try not to be so desperate to rent your property that you’re willing to accept someone with a low credit score or ignore income requirements. Most of the time, this approach will cause you to lose more money by way of damage, unpaid rent, and eviction lawsuits.
8. Don’t deny applicants solely based on social media posts
It’s normal to do some research on prospective tenants via social media, but this can come back to bite you if social media posts are your main reason for rejecting an applicant. You can’t use what you find on social media to reject an application without opening yourself up to a discrimination lawsuit for breaking the Federal Fair Housing Act.
The problem is that even if the post has nothing to do with a protected class, their lawyer will try to make it about a protected class and this is often a successful tactic. Always have additional reasons for rejecting an applicant that will hold up in court.
9. Do what’s best for your business
These tips will help you avoid mistakes and keep your business profitable while minimizing risk. Always do what’s best for your business. You’re a property investor, and you need to protect your assets.