By Becky Lopez
Most new housing providers may think that once they have had a tenant living in their apartment or property, their dream has come true, and all they have to do is sit down and to collect the rent. Often this dream can turn into a nightmare sooner than expected. Issues like late payments and tenant issues like lost keys and broken pipes can become the order of the day. If you’re a new owner, a few valuable tips can make the experience less painful and more enjoyable. Keep reading.
- Your rental property is a business
Although managing your new rental property is not your main job, it is an activity that provides you with additional income. Therefore, you should treat it like a business by being professional with tenants and your property manager. You must comply with local, state or federal laws for legal and reputational purposes. Do your research thoroughly and consult a legal expert if anything is unclear. It would be better to involve a local expert as he is familiar with the local laws.
In addition, like any other income, rental income tax is mandatory, and you can refer to Tax administration regulations know the different taxes you have to pay. However, you can reduce your tax liability by claiming deductions for maintenance and repairs, upkeep, depreciation, and property improvement expenses. Here, the input of a qualified tax specialist or accountant is a valid consideration.
In addition, you should think about protecting yourself from risks or liability claims by taking out home and umbrella insurance. Typically, these types of insurance provide protections against loss of rental income, liability claims, and property damage. Therefore, you could obtain financial compensation for losses due to bad weather, break-ins or fire. Insurance coverage may also include homeowners coverage, which protects against risks associated with renting your apartment, condo, or rental property for long periods of time.
Having a business means operating at low cost to maximize your income. One way to check the cost is to pay low insurance premiums. To do this, you can compare different rates offered by providers and choose an advantageous option. Just like shopping for home insurance, you can do the same for a homeowner’s policy by looking at the products offered by carriers. Other ways to minimize rental property costs include; stay on top of maintenance, carefully select your tenants and maintain a good professional relationship with the tenant.
- Make sure you get only the best tenants
If you haven’t hired a property manager yet, you shouldn’t relax your tenant selection criteria to simply fill a vacant property. A bad tenant can lead to higher operating costs and lower rental income, affecting your property’s return on investment. Always be thorough in the selection process by reviewing all applications and filtering your ideal tenant using the following information;
- Contact information including name, phone number and social security number
- At least two previous addresses of their last place of residence
- Work history and compensation history
- References such as previous owners, creditors, etc.
- Proof of income such as bank statements, pay stubs and tax returns
- Credit reports and criminal history
Communicating with the arbitrators and the previous landlord can take minutes or hours, but could save you from letting a bad tenant live in your property. You can use various online tools such as Truthfinder or Instant Checkmate to run a quick history on an individual. A little checking of their social media profiles, such as Facebook or Instagram, can also give you some insight into the character of the type of person who wants to rent your property.
Hiring a professional property manager can save you a lot of money in the long run. While you will pay a monthly management fee, the financial benefits of having someone manage your rental property are enormous. A property manager is not only your right-hand man, he also manages the following activities:
- Marketing your rental property online and offline
- Pre-selection of tenants
- Carry out routine checks on the property
- Collect the rent
- Ensuring tenant satisfaction
- Handling tenant repair and maintenance requests
- Legal aid and management of evictions
- Handles documentation and tax issues.
A property manager can allow you to generate stable rental income while minimizing the burden of managing day-to-day operations. Before hiring a property manager, it is essential to check their background and ensure that they have the necessary licenses to apply local, state and federal laws regarding tenant screening, lease termination, management of deposits and evictions.
- Be clear about housekeeping rules and maintain good service
It is essential to know your rights as a landlord whether a tenant damages your property intentionally or not. Generally, it’s every homeowner’s worst nightmare if you have to bear all the repair costs. This structural damage can cost you dearly, whether it’s tearing your carpet, smashing windows and doors, ripping out expensive appliances or punching holes in your wall.
Be clear about your expectations when signing the lease with your tenant. Make sure there are clauses in rental contracts about who should bear maintenance costs. You can even meet in person before they arrive so they can be aware of their role in keeping the property in good condition. A common mistake that new owners make is renting out their properties and not doing regular inspections. It is essential to set foot on your property at least twice a year to ensure that your property is always in good condition.
Ask tenants if they are comfortable and if they need any improvements or upgrades. Good tenants are likely to stay longer if they feel you really care about their stay at your property.
- Simplify the rental collection process
Unlike in the early days when tenants deposited their rent into a landlord’s account in cash or by check, you can simplify the rent payment process by using online payment services. There are many payment solutions you can use to eliminate late fees. In addition, these systems can facilitate the collection of penalties for violators.
Only certain collection processes may be correct, and what works for one owner may only work for some. When choosing an ideal process, opt for a more streamlined and efficient system. If you live far from your property, consider using a third party to collect rent or ask your tenants to make wire transfers. Some people still prefer to collect rent by mail. No problem with that, but ask your tenants to provide proof of posting from their post office as proof that the mail was sent. You can use it to track delayed mail.
If you live near the premises, you can ask your tenants to deposit their checks at your place of work or at your home. Be careful and avoid receiving wads of cash because several risks are involved. If you have time, consider collecting the rent in person. But be sure to issue a receipt to your tenant after receiving the check.
First-time homeownership can seem easy, as long as everything goes as it should. However, this is a tough call, so it is crucial to consult experts such as your local apartment association, lawyers, appraisers, realtors, accountants and property managers to help you through the process. . Thanks to these valuable tips, you will benefit from hassle-free relations with your tenants and a better return on investment.
The author, Becky Lopez, lives in Miami. She started freelancing as a full-time job when the COVID pandemic closed her office. She lives with her younger brother and their parrot, Sinbad. When she’s not writing, she enjoys reading and relaxing by watching Netflix. She also likes to travel.