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By Jenn Walker
Renting out your investment property can be a great option for making cash on the side, or as a full-time commitment. However, there are important factors to consider before making the decision to become a landlord. Prior to getting started, you’ll want to do some research into protecting your investment and making smart choices throughout the process.
Here are some things to keep in mind before renting your property out.
The Responsibilities of a Landlord
As a landlord, you will be responsible for keeping your tenants living in a clean and safe environment. There are local, state, and federal laws that outline the responsibilities of landlords, as well as what you shouldn’t be doing. These include topics such as non-discrimination, tenant privacy, health and safety regulations, zoning, codes, and rental agreements.
Before becoming a landlord, it can be helpful to join your local landlord or real estate investing association to learn more about the reality of renting out your property. Joining a local association will help you become knowledgeable about the specific rules and regulations in your area. Laws pertaining to landlords and tenants will vary in different locations, so you will want to be up to date about all laws that apply to you.
It is important to learn specifically what you will be responsible for before allowing someone to rent from you.
Financial Requirements
Being a landlord has financial requirements that go beyond the initial expense of purchasing a property. It is important to make sure that you will be able to meet certain cost obligations before deciding to rent out your property. Some costs, such as legal expenses can be unexpected, so it is good to have money saved that could cover this if needed. Other expenses that are more routine can include property repairs and maintenance, property taxes, fees, insurance, and routine legal advice.
Choosing the Right Property
If you do not already have a property, you may be unsure what the best kind of property to rent is. There are several factors that go into determining whether a property would be suitable for renting. For example, you want to choose a location that is going to keep the property rented regularly, someone that is near public transportation or in a busy area will attract tenants. You will probably also want it to be conveniently located so that you can get there easily if anything happens.
You should also consider how much work the property will need before it is rental-ready and whether the repairs that need to be done will be worth it. If you choose a property for a low price, but it is going to cost a lot of money to repair, this may not be the best investment to turn into a rental property.
Maintaining the Property
Turning your investment property into a rental will also require regular maintenance and repairs, so you will need to have enough free time in your schedule to take care of these responsibilities or the funds to pay others to handle this area. You will want to maintain the property to ensure your tenants are safe and healthy, and to prevent problems from occurring in the future. If you do not possess the skills to make routine repairs and check for any issues, you will want to find someone who can factor in any extra cost this could have. You will need to be prepared to hire electricians, plumbers, and other repairmen when necessary. If you are skilled enough to handle most or all of these potential problems, you need to consider whether or not you have the time to devote to this.
Handling Renters
As a landlord, you want tenants who are going to pay their rent and cause minimal problems, so the first step to dealing with tenants will be coming up with a thorough screening process. The law protects individuals from housing discrimination based on race, religion, disabilities, family status, and sex but it is important to familiarize yourself with any other regulations in your area.
Once you have chosen a suitable renter, you will need to come up with a system for dealing with problems and collecting rent each month. Talking to other local landlords can help you prepare for any common issues, and provide a good example to model your own landlord tenant relationship after.
Do You Want to be a Landlord?
After investigating the financial requirements and general responsibilities of being a landlord, you need to determine whether or not this makes sense for you. If renting your investment property seems like a good way for you to make a profit in your spare time, becoming a landlord can be a good financial investment. However, if you don’t think you would enjoy renting out your property, don’t have time for it, or determine that the profit would not be worth it, you may want to look into alternative ways to utilize your investment property.
Jenn Walker is a freelance writer, blogger, dog-enthusiast, and avid beach goer operating out of Southern New Jersey, who writes for a plumber in Moorestown.
