New landlords are entering the market at record rates. All of a sudden, people seem to be becoming landlords overnight! It’s great to see these opportunities for new property owners, but if you are one of these landlords, there is no doubt that you face a learning curve.
Protecting yourself and your investment starts with being informed. Here’s a look at five ways to protect yourself as a new landlord.
1. Choose the right properties to invest in
As a landlord, you should choose an appropriate property that fits your budget and needs. But you should not only choose the right properties but also be proactive with your personal safety.
While this may seem like it would be an easy decision, there are a lot of factors that need to be considered before you go out and start looking for properties.
2. Write a clear and detailed rental agreement
Writing a clear and detailed rental agreement is an easy way to screen out applicants and set terms for standard transactions by minimizing the confusion about your rental policies.
It can also help protect you from costly problems down the road and help ensure that you’re not vulnerable to claims If something goes wrong that is not in your tenancy agreement. Having this agreement in writing and signed ensures this can’t happen.
3. Landlord insurance is a must
Following your dreams and becoming a landlord can be an incredible experience; however, entering the world of property ownership with landlord insurance is vital. Landlord insurance can help protect you from a whole host of potential costs when it comes to your property, so be smart and get insured.
4. Keep good records
If you are going to be a landlord, you will most likely have to keep good records of all financial dealings; rent paid, deposits taken, repairs made and more. Keeping good records is also suggested by most landlords’ associations.
This is especially important if you own an apartment building or several units in a neighbouring building. Keeping detailed records from the beginning will save time and money after tenants move out and need to collect the remainder of their security deposit.
5. Carefully screen your prospective tenants
The last thing you want to do is end up in court disputing a landlord-tenant problem. An ounce of prevention goes a long way. It’s important that you carefully screen tenants prior to signing any rental agreement.
Taking the time to meet with them in person and perform a background check (to make sure they’re the right fit for your apartment) will save you major headaches later. You can find screening and background checks online through organizations like the American Apartment Owners Association (https://www.american-apartment-owners-association.org/tenant-screening/) for every budget to help you make an informed decision when it comes to tenants. You have a financial investment and want to protect it as much as possible.
It can be scary to be a new landlord when you have no idea what you’re doing, but there are ways in which you can protect yourself and prepare for any issues that may arise with your tenants.
As long as you remain involved and communicate regularly with your tenants, then you should have no problem being a great landlord.