By Kristina Marshall
In our current HGTV era, more and more Americans are finding their way into the world of real estate, whether it be through efforts to try their hands at house flipping or taking on rental properties for the first time.
So, if you’re considering a leap into the landlord game, or if you’ve already taken the leap and are looking for some practical tips, check out the following five simple steps!
1. Advertise Online with Clear, Attractive Photographs.
As a landlord, you’re already benefiting from a market that’s favoring renting over buying. You are also definitely working in a market that privileges internet-savvy operators. The vast majority of renters conduct their housing research online, through traditional web searches and real estate applications like Trulia and Zillow.
These platforms necessitate that you take care to market your property attractively because people now expect dozens of posted pictures before agreeing to come for a walk-through so that they're not wasting their time with a property that won't suit their needs.
This can work in your favor, however, if you take the time to capture high-quality photographs that highlight the key selling points of your property, setting you apart from many other landlords who fail to grasp the importance of advertising.
2. Carefully limit your renovations.
As a first-time landlord, the temptation may arise to try to make your rental property perfect. Renovations are certainly part of the game, and for many landlords, they are a source of enjoyment. But, it's vital to consider your renovation decisions carefully to ensure that the renovations will pay off.
For example, installing top-of-the-line countertops in an apartment that will likely draw younger tenants with no concept of the various tiers of countertops represents the kind of mistakes that separates successful landlords from landlords who flop. While it's important to take pride in your property, make sure it’s a sensible pride!
3. Cover Your Bases with Homeowners' Insurance and Warranties.
You're likely familiar with the concept of homeowner's insurance: pay a premium in exchange for the peace of mind in case tragedy strikes (e.g., fire, hail, theft). Most banks require proof of this type of insurance during the mortgage process, so don't expect to avoid this cost.
But many first-time landlords are less familiar with the second type of coverage, the homeowner's warranty. These warranties cover systems and appliances that are not protected under standard homeowner's insurance policies.
These warranties can be extremely valuable given the reality that a temporary tenant is unlikely to attend to the details of the upkeep of essential systems and appliances since they do not own these things! If you are providing items like refrigerators, garage doors, etc. as part of your leasing agreement, consider a quality homeowner's warranty so that you're not sucker-punched with a costly replacement that could quickly turn an expected profit into debt.
4. Know the applicable laws in your location.
The last thing you want as a new landlord is a court date. While being a landlord may seem like a simple transaction between you and your tenant(s), it is vitally important that you research the pertinent federal and local laws so that you are protected from lawsuits.
For example, the federal government has fair housing laws that dictate some of how you can go about screening your potential tenants. Similarly, requirements are in place regarding the content and format of the leases that you'll sign with your tenants.
Knowledge of these laws is not something you want to procrastinate; know the laws BEFORE you start your renovations, advertisements, and leasing agreements.
5. Avoid allowing pets, if possible.
Even if you’re a pet lover yourself, consider restricting or banning pets from your rental property. The nominal fees you can charge your tenants to have pets may seem like a reasonable way to make some extra cash.
Still, experienced landlords routinely argue that those fees rarely cover the associated costs that you will have to deal with due to the wear and tear that pets cause on a property. For example, dogs often damage flooring, baseboards, and carpeting, which requires expensive replacements in between tenants that can eat away at your profits.
These types of projects can often be great ways to make money. Still, they can also prove to be very intimidating for first-timers who quickly come to realize that the realities are quite different from the images they’ve acquired from their favorite TV show.