There are a few things every landlord should know before jumping into the rental property business. If you’re renting out a spare room or if you own an apartment complex, these four skills will prove to be invaluable during your career. Take a look to brush up on your landlord knowledge. Happy renting!
Understand Landlord-Tenant Laws
Landlord-tenant laws vary by state, but there are many federal regulations you have to abide by no matter where you live. The Department of Housing and Urban Development (HUD) enforces the Fair Housing Act, which ensures landlords cannot discriminate against potential renters. You can’t deny rental to anyone based on:
- Familial Status
- National Origin
You are also required to maintain livable conditions on the property and tend to any repairs in a timely manner. In addition to habitability, city ordinances all mandate specific building codes to ensure the rental units are up to safety standards. If you ignore these laws, you could face severe fines and risk your business. Security deposit rules, eviction laws, service animal regulations, and rules about what you may and may not ask a tenant are determined state by state. Before taking on a renter, make sure you know these laws by heart.
How to Read a Background Check
It’s always a smart idea to perform a background check on potential tenants. A background check will give you insight into whether they will be responsible tenants or bring criminal activity to your property. The problem is, many landlords aren’t sure how to read the information once the check comes back! A standard background report includes:
- Credit score: This will give you insight into whether they are responsible with money.
- Criminal background: Find out if they are on the National Sex Offender registry, FBI Watch List, or have been convicted of past crimes.
- Eviction report: Discover if the tenant has had past evictions—if so, this could be a red flag.
- Income verification: Make sure the tenant is being truthful about their income and pay rent.
How to Calculate Rent
Arguably the most important thing to know as a landlord is how to set the right amount of rent. Setting it too high can be detrimental to your business, while setting it too low could attract undesirable tenants. Before putting your property on the market, do some research on the rental trends in the surrounding neighborhood. Use rental websites to get a sense of what similar units are going for, and determine whether yours can fall on the higher or lower end. Do you have unique amenities? A prime location? Relaxed pet regulations? Be sure to include those factors when deciding on a monthly price.
Remember, every day that your unit sits empty you’re losing money. If you find a great tenant who can move in before the first of the month, don’t wait to start taking in some cash! Learn how to calculate prorated rent so you can get your unit off the market as quickly as possible. Whether you’re charging prorated rent or standard rent, you also have to consider whether trash, water, sewage, and electricity are included in the monthly bill. Be sure to clearly outline all the terms of your rent in the lease whenever a new tenant moves in.
When to Delegate Responsibilities
The hallmark of a good leader is knowing when to delegate. Depending on your rental business and other jobs you may have, it can be a good idea let a property management company handle some of the day-to-day responsibilities. Collecting rent from multiple tenants, scheduling repairs, answering prospective tenant questions, and ordering background checks can all become cumbersome tasks. When you let another company handle these chores, you have more time to focus on investing in more properties or pursuing other business goals. Just keep in mind that this will take a decent cut out of your monthly check, so make sure you are financially fit enough to handle it!
With this knowledge under your belt, you’ll be well on your way to owning a successful rental business in no time. If you stay aware of any property laws that change, properly screen your tenants, and know how to divvy up tasks, you’ll be golden!