Becoming a landlord can mean managing one single-family home, or it can be a full-time, multi-unit job.
Perhaps you’re renting out a second home to cover the mortgage and build equity, or your sole focus is leasing and maintaining multiple apartments in a high-rise residential building. Whatever the case may be, all landlords must stick to industry rules and regulations to best serve their tenants and remain liability-free.
Beyond upholding rights and responsibilities, landlords are tasked with other, less obvious duties. Consider these five pertinent responsibilities first-time landlords sometimes forget.
#1: Follow the Local Market
Pricing your unit based on the local market, trends and competition is the best way to keep vacancies low. Units with high-end appliances and new hardwood floors won’t automatically receive the highest rental rates, but those amenities can push you into a higher pricing tier in the right market. Because location has one of the biggest impacts on prices, consider rental rates in your specific neighborhood. School ratings, parks, restaurants and nightlife are a good gauge for how “rentable” your locale is and what price tier is fair. Then, cross-reference local comforts with interior amenities, upgrades and square footage to determine the most competitive and financially advantageous appraising strategies. Even after you’ve set initial prices, staying current on the market helps you decide when you need to offer incentives, like one month free, or increase your rents.
#2: Screen Tenants Thoroughly
Every landlord wants to fill their units in the most efficient manner possible. However, approving the wrong tenants can hurt you in the long-run. Choosing the best qualified renter helps circumvent problems such as late payments, damages and evictions. A thorough tenant screening typically includes employment verification, background checks, income verification and credit reports. Unless you’re renting out college campus apartments where potential tenants have little to no renting history, ask for landlord references as an additional safeguard.
#3: Budget for Costs
While lease agreements vary, landlords are responsible for many maintenance expenses. An exception might be landscaping on a single-family property, but investors often absorb these recurrent fees and increase the rent to offset the costs. As the homeowner, be sure to budget for ongoing maintenance costs and set aside a rainy-day fund for unexpected expenses, such as replacing an appliance or repairing a burst pipe. Aside from maintenance funds, make sure you also have cash in an emergency savings account to pay the mortgage in case of unanticipated vacancies.
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#4: Develop Marketing Initiatives
Rising housing costs have put homeownership out of reach for many, so renting is a must for millions across the nation. But, that doesn’t necessarily mean your unit will rent immediately. The increased demand for apartments has driven extreme rental development, especially across major cities in the U.S. To stand out, take high-quality photos to highlight the best aspects of your unit. Include a well-written, compelling and error-free listing description to accompany professional photos. Finally, use online marketing to your advantage. Post rental listings on national search websites to reach the widest audience, from long-time locals to relocating newcomers across the country.
#5: Understand Fair Housing Laws
Fair housing laws are intended to eliminate discrimination and guarantee that everyone —regardless of race, gender, religious affiliation, physical abilities or the like—has equal access to safe housing. While the national regulations are widely understood, educate yourself on local fair housing laws related to advertising and direct communication. As a rule, focus on the characteristics of the property itself, not on the type of renter it might appeal to.
Being a landlord takes due diligence, but following the law is a must. From there, pricing, marketing and maintaining your rental will help you reach the ultimate goal: profitability.
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