At some point you may decide that you have the money in your budget to obtain a property that will bring in a passive income for your family. And by purchasing a rental property, you can not only have your tenants virtually pay the mortgage, but you may be able to bring in some extra cash for your primary household in the process. That said, managing a rental property is no cake walk. There are all kinds of legal steps you’ll need to take to protect yourself and your interests. And you’ll also have to be on call to sort out problems, make (or arrange for) repairs, and even execute evictions. However, you’re not the first person to face such problems, and with a few guidelines to follow you can find good tenants and enjoy the many benefits that come with owning a rental property.
- Create a rental agreement. This is essential to protecting yourself and your property. Your rental agreement should clearly spell out the terms of your arrangement with renters, including the amount of rent, when it is to be paid each month, penalties for late or missed payments, your eviction policy, the amount of deposit, and so on. If you’re not sure what to include in such an agreement, you can either find templates online or better yet, contact an attorney and pay to have a legal agreement drawn up for renters to sign.
- Insure your property appropriately. When you have tenants living at your property, it’s a good idea to beef up your insurance to cover any potential additional costs that could be incurred. You’ll need to purchase a landlord policy instead of the regular homeowner’s insurance that you have for your primary residence. It could cost a bit more, but considering standard insurance may not cover issues when your property is rented out, it’s a wise precaution. You should also require anyone living in the home to purchase renter’s insurance, which covers the cost of their personal property in the home in cases of theft, flood, earthquake, or other types of damage.
- Interview all prospective renters. Phone interviews are not enough for most employers to decide if they want to hire someone, and you should take the same tack by interviewing all prospective renters in person. You’ll also want to check up on their rental history, of course, but looking them in the eyes can really help you to determine if you want to rent to them or not.
- Schedule regular inspections. This is something you should include in your rental agreement. It’s your property and you’re the one that will suffer losses should it be damaged in the course of a tenant’s residence. So schedule inspections on a monthly basis, making reasonable accommodations to work with your tenant’s schedule. It’s standard to give 24-48 hours notice and to show up only when your tenants are present, providing they don’t put you off indefinitely.
- Hire a management company. If you’re not at all comfortable in the role of landlord for your rental properties, you can relieve the burden by hiring a reputable management company like Greenlee Realty Group. Just make sure you understand what services they offer and how the payment structure works so that you are comfortable with the arrangement.