Tips for New Landlord

Tips For a New Landlord

So you just bought your first investment real estate property, making you a new landlord – it’s a nerve racking feeling, but still very exciting. Your journey is just beginning, it is important to become well-versed and understand the most useful tips for a new landlord. 

Treat Your Investment Property Like a Business 

Many landlords are investing in real estate for a second source of income and have another primary, full-time occupation. However, treating your investment property as a main priority is extremely important. Being organized, timely, professional, while conducting proper due diligence is vital for your success. 

This includes knowing local, state, and federal laws related to your property. In addition, being protected should be one of the first tasks you tackle – get the right landlord’s insurance as well as being connected to a reliable lawyer. 

Make sure your property is in good standing. Ensuring your property is habitable and up to the standard of your tenants and the legal system increases your reputation and the reputation of your property. In the case of emergencies and other faults, have a plan to fix them as soon as possible, if not immediately. 

All in all, ‘treating your investment property like a business’ is a more elaborate way of saying be professional and put your focus and best effort into maintaining the property and happiness of your tenants. 

Consider Hiring a Property Manager or Managing Service

Being a landlord comes with a lot of time and hassle directed at your investment property. Already a stressful endeavor, it can be that much more for those investing as a second source of income or as a “side-hustle”. For either situation, it is very likely that hiring a property manager or property management service company would be a worthwhile investment. 

A property manager will take over the hands-on aspect of dealing with tenants and property issues that may arise. This can alleviate much of a landlord’s time management issues as well make for a more organized system for the investment property as a whole. 

As a reminder, you will still be legally responsible for the property as well as the requirements of it and yourself to be able to habit tenants. 

Do Your Research

For every part of the process of investing in real estate, research is one of the most important things. In the case of a new landlord, the most valuable research relates to local comparisons, the best tenant application process, landlord’s insurance, and the necessities for rental agreements.  

Comparing your property to others nearby allows you to get a great idea for the amount of rent you should be charging. Though it shouldn’t be the primary method of calculation, it should be of high consideration, once your margins have been met. 

Acquiring tenants is another sector requiring research. This research will allow you to decide how you will market, how prospective tenants can apply, and how they will be selected. It may seem easier to have physical applications on paper, but putting the extra time and money to create an online application will make organization and the creation of a database significantly easier. Nonetheless, an application is a highly recommended aspect. More areas of thought: Are you going to pull credit? A background check? Require rental insurance? These are all things we suggest saying “Yes” to including these will highlight red flags and allow you to make the best decision about your tenants. 

Researching landlord’s insurance is fairly self-explanatory. You should look for insurance that gives you the coverage you’re looking for, while still being reasonably priced. We recommend spending the extra money on the insurance that gives you the coverage you need. You never know when you will need it, but when a situation arrives where you do, it will be a ‘life-saver’. 

Lastly, researching rental agreements will give you an idea of what specifics you would like to consider to add into the agreement. A documented rental agreement lays out your expectations and what your tenant can expect from you. Be specific, be clear, and make sure to hit all your corners. A written document is most effective in case of any legal problem and protects you. Remember, your rental agreement must still comply with local, state, and federal rental laws and regulations. 

Enforce Your Rules

After constructing your rental agreement and laying out the rules of your property, adhere to them as much as you would expect your tenants to. By doing this, you will gain the respect of your tenants, build a better reputation, and your tenants will be more likely to follow the rules as well. However, if they were to not follow them, make sure to enforce them. If you do not enforce them and give consequences for them, your tenants may take advantage of your leniency. 

Your “late rent fee” is considered to be one of the most important rules and something that many landlords will be lenient on. But this often leads to rent being paid late becoming a usual occurrence. You can consider allowing a grace-period into your rental agreement, but be strict on those timelines. One rule that tenants appreciate, that you should be very diligent of following, is the 24-hour notice of entry. Meaning you have to give your tenant notice 24 hours before coming and entering their unit. 

Keep Good Track of Your Financials

Many landlords have the fault of becoming unorganized with their investment property finances. In addition, many also falsely believe that they will never run into a tenant that will be late on the rent, if they pay at all. Having a tenant fall behind or becoming unorganized is something that virtually every landlord will experience throughout their time of being in investment real estate. 

To combat this, it is important to develop an effective system and keep a close eye on it. Overestimate, or round-up, on the cost of taxes and other fees to be safe. If you lose track or get to a point where you’re not managing your finances property, things can turn very quickly, and you can be at risk of losing a lot of money. 

Some property management services will include a financial management service for the property they are hired to manage. If they charge extra for this and you aren’t the most financially savvy individual, it may be something to spend the extra money on. 

Overall…

Tips for a New Landlord

  • Treat Your Investment Property Like a Business 
  • Consider Hiring a Property Manager or Managing Service
  • Do Your Research 
  • Enforce Your Rules 
  • Keep Good Track of Your Financials

Keeping good records of everything will make these easier to accomplish and keep you organized. These are just a few of the basics for a new landlord to keep in mind to help ensure their success. 

Looking to become a landlord? Or are you already one and looking to purchase a second investment property?

Contact a LenderFi.co loan officer to discuss your loan scenario to figure out how you can get the best rates, terms, and financing for your investment real estate project!

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Ryan Thaler

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