Decided to become a landlord? With the right preparation, planning, and mindset, the journey ahead has all the potential to be prosperous and profitable. Going into this job blind, however, would be a mistake. Being a landlord involves much more than simply providing property for someone to live in. It requires careful consideration and effort.
To help you succeed as a first-time landlord, we have compiled some simple tips that will set you on the right path.
Treat your landlord venture like a business.
In order to succeed, your landlord venture should be treated like a business. Being professional, prioritizing receiving rent payments, and following all regulations and legalities should be at the top of your to-do list at all times.
When it comes to regulations and legislation, there is quite a lot to be aware of, from tax, energy efficiencies, gas safety, and more. It might be the most exciting part of being a landlord, but it’s certainly one of the most important, so spend some time getting up to speed and doing your research. If you’re feeling underconfident, you could always explore the possibility of using a letting agent to ensure you stay on the right side of the law.
And as you’re running a business, you need to make sure it’s making financial sense for you. This means ensuring that you’re charging the appropriate amount in rent, given your property’s type, condition, and location. Set expectations early with your tenants that failing to meet rent commitments will be treated seriously – it’s the bare minimum that they must deliver each month.
Of course, there may be times when things get difficult financially for your tenants, and hopefully, your relationship with them means that they will be able to come to you in good time to flag this so you can work together to resolve it. But without rent payments, you lose out on income and may potentially be operating at a loss.
Screen your tenants
The key to a successful tenancy is finding the right tenants to live in and take care of your property. You can do this by screening your tenants during the tenant-finding process. Finding the right tenant isn’t just about finding someone your gut tells you that you can trust. It’s important to carry out certain checks to find out if they are financially stable, has a criminal record, can meet your rent payments, and investigate their past background with other landlords if applicable.
You should carry out a credit check on any prospective tenants and request employment references to confirm their employment status. You can also request landlord references from a prospective tenant’s past landlords to ensure that there were no instances of unpaid rent, malicious damage, or disputes.
As a landlord, you have the ultimate decision-making power when it comes to how you rent your property. However, it’s important to avoid discrimination and not use any of the ‘protected characteristics’ as a reason to reject a tenant. These characteristics include nationality, gender identity, sexual orientation, disability, race, or religion. It’s also illegal to reject someone based on their age, marital status, or pregnancy.
Take out landlord insurance.
As a landlord, there are risks outside of your control that could affect you and your property. Landlord insurance is available to safeguard against events such as loss of rent, accidental damage, legal fees, and the need for alternative tenant accommodations.
It’s not actually a legal requirement to take out landlord insurance when renting out a property. However, many mortgage lenders will require that you have it before allowing you to take on tenants. Standard home insurance policies won’t cover you for rental activities and the eventualities that you may be met with as a landlord.
It’s highly recommended that you take out landlord insurance, considering the property owner’s liability insurance, contents insurance, and buy-to-let buildings cover for comprehensive protection. You can compare landlord insurance quotes online to secure the best deal.
Draw up a comprehensive written tenancy agreement.
A tenancy agreement is any landlord’s best friend and the holy grail. It’s the best way to communicate expectations between yourself and your tenants and protect yourself in legal situations. A tenancy agreement must be signed by both parties at the start of the tenancy and can be referred back to should any questions or disputes arise.
You can find plenty of tenancy agreement templates online to get you started. However, every tenancy agreement should be specific to you and the rules that you need to enforce. It should include details about whether smoking is permitted in the property, whether there is a late rent fee, how much the deposit amount is, and where it will be safely kept until the end of a tenancy. With everything mapped out clearly in your tenancy agreement, there is likely to be less confusion down the road.
Keep a record of everything.
Particularly as a first-time landlord, protecting yourself and your investment should be paramount. That’s why it is recommended that you keep a record of all communications with your tenants – be that telephone records, printed and saved emails, and/or text messages. You should also keep a receipt of all rent payments.
Hopefully, you’ll go through your first tenancy with no legal issues. However, if they do, you’ll want to ensure you have records of transactions and communications to support your case.
Being a landlord has the potential to be a great investment opportunity. Take good care of your tenants, and they should take good care of your property in turn. Be a responsible landlord and take your obligations seriously. By being savvy and making informed decisions, you can expect to see positive outcomes from your investment. Good luck!
Featured Image by Gerd Altmann from Pixabay