Sometimes, it seems simple to become a landlord and make a lot of money doing nothing. However, a landlord’s job is ongoing, and they often have to be on call in case of any issues or emergencies. There are also many laws and costs to factor into the cost of rent to make sure you don’t suffer losses when large issues appear.
Being a landlord isn’t as easy as it sometimes sounds. However, by taking some basic steps and making sure you have knowledge of laws in your area, you can make sure you are well-protected of your rights and are making a profit going forward.
Keep reading to learn about the 4 most important steps that come with being a landlord in 2022 so that you are ready to move forward with renting out your property.
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1. Learn landlord-tenant laws
There is a lot of information when it comes to renting out property. Under landlord-tenant laws, there are many things to know, such as:
- Fair Housing Law
- Lease Agreements
- Landlord-Tenant Rights
- Rent and Security Deposits
- Notices
- Evictions
Laws also vary by state. This means even if you’ve been a landlord in one state, the laws may be different from what you know in another. It is always good to take the time to properly read all aspects of law involving renting so that you know what to expect, what you can be held liable for, and how to handle evictions.
Even if you don’t remember the exact details, knowing how to find the information and having a general idea can help you out when problems arise without worrying about extra paperwork.
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2. Decide upon a rent price
Picking the right rent is important, but thankfully not all too hard in modern times. It is important to get a general idea of what rent in your area is like for similar properties. You can do this by simply searching for rentals online in your area.
You want to be competitive with the rentals around you. If you price much higher than those around you and don’t provide proper amenities to justify it, you lose out on potential customers.
However, if you are priced too low to bring in more people, you risk dealing with some shadier renters and missing out on a good profit.
There are also other factors to consider, like your mortgage. Preferably, you want to be able to cover the cost of your mortgage and then some. Being able to make enough profit that you make an income and manage to put money aside for any emergencies or fees would be important to keep your business going for a long time.
You will also want to frequently check on market prices and adjust your rent accordingly. About once a year, before it is time to sign a new lease agreement, check the prices in the area and see if they are going up. If they are, you may be able to increase prices and get more of a profit.
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3. Create a lease agreement all tenants must sign
A lease agreement is essential when you are bringing in new tenants. This allows you to set up any expectations and set guidelines and procedures.
Some things to include in a lease agreement are:
- What jobs you will do around the property
- Who is responsible for specific expenses
- Length of tenancy
- What happens if the lease is broken
- What utilities, if any, are covered in rent
- What furniture and appliances, if any, are included in the house
- If they have a parking space
- What you expect from the tenant, such as not to disrupt other tenants, that the outside must look nice, etc.
- What pets are allowed, if any
- How much rent is, and when it is due
- Whether the apartment can be subleased or not
You can include more information, but this gives you a good idea of what main points you need to place into a lease agreement. Always check local and state laws before making the agreement, to make sure you aren’t violating any laws with your lease.
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4. Get landlord insurance
Landlord insurance is a little different from homeowner insurance. It is specifically made to help you get the coverage you need with accidental damage, damage caused by tenants, and any repairs.
It is important to note that landlord insurance only covers you. Tenants should get their own renter’s insurance to cover damages to their personal property. It also doesn’t cover repairs such as if furniture breaks.
Landlord insurance does cover a lot more than standard homeowners insurance, and it helps to protect not only you but your property.
- Any guest or tenant injuries on your property
- Property damage caused by a covered situation, such as a tornado, hail, flood, etc
- Loss of income if you are unable to rent due to a problem with the property
- Damages due to break-ins, weather, etc
- Damaged equipment and additional buildings that are necessary to maintain the property
The price of insurance is worth it. Though it may sometimes seem like an unnecessary step, having landlord insurance is there to protect you when something drastic happens to your rental property or you find yourself unable to rent out.
