Many are attracted to being a landlord because of the appeal of making passive income. Others probably never intended to become landlords, and acquired rental property through inheritance.
Whether you're an accidental landlord, or you're investing in property as part of a long-term financial plan, the process is often confusing for a first-timer.
You'll need to do a detailed rental analysis, thoroughly screen tenants, and see to various other responsibilities. Want to learn more about how being a landlord works? This article highlights some crucial tips for your consideration.
Understand the Law
No rental strategy is complete without an understanding of the law. Often, landlords run into legal issues because of misunderstandings, particularly when it comes to local landlord-tenant laws. Typically, these laws cover things like lease agreements, rental pricing, and security deposits.
Ignorance of the law is never an excuse, so maybe sure you know which local laws apply. You also need to know about fair housing laws. These laws prohibit discrimination based on protected characteristics such as:
- Race
- Religion
- Gender
Screen Your Tenants
Once you sign a lease with a tenant, they gain all kinds of legal protections. If they cause you problems, such as damaging the property, you might have a hard time evicting them. Thankfully, you can safeguard yourself by doing tenant screening.
Through tenant screening, you verify a potential renter is trustworthy by evaluating things like criminal history, employment situation, and relationships with previous landlords.
Usually, problematic tenants have a past full of red flags. A tenant background check means you can simply refuse to rent to them.
Do Detailed Rental Analysis
One of the biggest mistakes you can make as a new landlord is failing to do a comprehensive rental analysis. Some landlords believe owning property is a guaranteed passive income. In reality, it's a delicate balancing act.
You'll need to do extensive market research, and you'll also need to calculate expenses. Making mistakes in this area, such as not accounting for property management fees or maintenance costs, could ruin your return on investment. Without a property rental evaluation, you'll end up putting great effort into the property without having much to show for it.
Aim for Preventive Maintenance, Not Repairs
Emergency repairs can also destroy your investment returns. Calling out contractors to fix something like a leak in your roof or burst plumbing doesn't come cheap. While some emergencies do genuinely come out of nowhere, most of them have clear signs.
With regular inspections, you can identify the signs of a potential issue and do preventive maintenance rather than emergency repairs. Doing maintenance is almost always cheaper than doing repairs, the key is identifying the problems early.
Need Professional Help With Rental Analysis?
As you can see, being a landlord requires careful planning and attention to the finer details. Mistakes in your rental analysis could ruin your investment returns.
While hiring a property management company is another expense, it's money well spent if they help you avoid these mistakes. First Class Realty & Management is your go-to company for your property management needs.
In property management, experience counts, and we're one of the most experienced companies in Houston. Trish Ferrier (our designated broker) was the first woman in Houston to earn her master property manager designation. Contact us today and let's talk.