There is absolutely no doubt that the rental business is a highly lucrative and rewarding endeavor for its practitioners. However, this is more so for only those who have the correct knowledge and skill to navigate through the many factors that are necessary for success in this highly competitive sector. Thus, first time landlords would have to consider all the essential factors carefully and painstakingly before venturing into renting out their properties to prospective tenants.
But like all other skills, real estate rentals could also be patiently learnt and the knowledge gained, applied in going about renting out any properties with a view to earning substantial income over time. So what are these key points that should be considered before jumping in to rent out your property for the first time?
1. The capacity of the tenant to pay
Why are you venturing into rentals in the first place? You are in this for the money that you could make by providing quality property to seeking tenants at a rewarding rate of return. This can only be achieved where the tenants have the effective capacity to pay whatever rates you intend to charge for your property.it is therefore important that you establish the wherewithal of your prospective tenants ab-initio in order to save yourself headaches and disappointments down the line. You could get this information through references from former landlords or the tenants’ employers. Similarly, if you are considering renting out to students, you will do well to involve parents or guardians.
2. Self-Management
With your own real estate property, the tendency is for you to opt for self-management and operations of your new rental business. Doing this may save you costs and place you on the driver’s seat, as it where; in running your affairs. However, it will be advisable for a first time landlord to seek the services of a professional real estate agent. He will handle any adverts for your property at an affordable cost and also conduct background checks on the prospective tenants as well as getting them within a reasonable period of time without much hassle. Again, should you require engaging a property manager to take charge of your property; the independent real estate agent could easily step in to provide that function.
3. Well maintained property
However, you may not need the services of a professional agent to do the basic job of maintaining your property in an excellent condition. This is an absolute must if you intend to obtain optimal rates for your property. You must then ensure that the plumbing, electrical wiring, structural integrity and the general aesthetics of your properties are of the highest possible order in order to attract equally quality tenants and rates.
4. Know the Rules
There are, as you know, federal and local state laws, regulations and codes guiding the conduct of all those individuals and corporate entities that are involved in real estate transactions. The obligations and responsibilities of a landlord are largely spelt out and you should therefore make yourself conversant with these codes so that you do not run foul of them and jeopardise your precious real estate investments. As we all know, ignorance of the law is never an excuse for its violation. Some of these obligations include, depending on where you live, registration of your property for tax purposes, regular repairs and maintenance of the property, provision of adequate spaces for the pleasure and use of your tenants, compliance with stipulated standards in lighting, ventilation, plumbing and security systems. And should you need to review the terms of the rental contract, you have to remember to give adequate notice to your tenants in order to give them enough time to weigh their options.
5. Rental home insurance
It is always good to prepare for un-expected events that may impact on your rentals negatively either through natural phenomena such as hurricanes and tornadoes or otherwise. You should therefore consider insuring your properties against loss of rental income, medical and legal expenses etc. Where available and advisable you may encourage your tenants to equally obtain the insurance packages that are appropriate for them.
6. Your entitlements
Yes, you also are entitled to certain rights as a landlord. We have already discussed your obligations and responsibilities above and now we look at some of the things that are your due. First of all, it is obvious that you have to be paid monthly rentals as at and when due without fail, you must be notified of any damages and disrepair to your property, and you must be paid any increases in leases as stipulated in the rental contract. This is the more reason why you must ensure that the details of the contract are written down in black and white clearly spelling out the obligations and rights of each party.
In conclusion, renting out your property for the first time could be challenging and exciting. It will also provide you handsome financial rewards especially if you consider the factors listed above as well as other points that space could not allow us to discuss. All you need to do is map out your plans and strategies and jump into it with all the commitment and determination to succeed. And it shall come to pass.