There is a lot more to being a landlord than simply buying a rental home and finding a tenant to occupy it. If you are planning to join the rental market as a landlord, here are six vital skills you need to master before you sign your first lease and allow a perfect stranger to rent your home.
1. Learn to Screen Prospective Tenants
Not only do you need to run a credit check on each potential tenant, but you need to take the time to learn how to read the report. These reports contain a lot of very important information such as past residences, payment histories, and current credit score. You also need to be able to detect false information such a landlords, addresses, and employment references. You would be surprised at the extent to which someone who is desperate for a home will go.
2. Get Evictions Under Control
One of the hardest things you are ever likely to have to do, is hand one of your tenants an eviction notice, especially if they have a family. When you have tenants whose rent is late, you need to follow up with them immediately. Try contacting them by phone first, but don’t hesitate to hand them a 3-Day Notice of Intent to Evict. As soon as the notice expires start the eviction process. Bear in mind that chances are good if they can’t afford this month’s rent it will be even harder for them to afford two months.
3. Learn to Estimate Rents
While using nearby rental amounts as a base is a good start, it is not enough. You need to be able to look at your rental property with an unbiased eye and set the rent based on its appeal, value, and any special features. You can use a number of online rent surveys along with local listings to help you set the rent.
4. Never Let Tenants Do Their Own Repairs
While you may be lucky enough to have a tenant who can handle most repairs safely, more often than not this will not be the case. What happens if something goes wrong, who is going to foot the bill? What happens if your tenant or someone else gets hurt during or after the repair? Do you have enough liability insurance to cover the costs? The risks are too high, either learn to do the work yourself or pay a professional.
5. Keep Your Property In Good Shape
You should plan to inspect each of your rental properties at least once per year. Your inspection should take in the basics like the caulking around the tubs and sinks, any signs of visible leaks, the condition of walls, carpets, and appliances, and overall cleanliness. This way you can make any necessary repairs before they become serious problems. Also, have a termite inspection every two years as well as a roof inspection.
6. Take Care of Your Security Deposit Refunds
Once you have received a tenant’s notice of intent to vacate, you have to offer them a pre-move out inspection. According to California law, you only have 21 days to provide your tenant with a detailed list of any deductions you will be withholding from their security deposit. You are then required to send them the balance. It pays to keep good records and have documentation on hand to back up any charges just in case the tenant decides to take you to small claims court.
It is up to you to effectively manage your rental units. The best way to do this is by learning what it takes to be a fair yet firm landlord.