Being a landlord is a great way to keep busy, earn income, and eventually build wealth. However, the responsibilities of owning, managing, and renting properties should not be overlooked. It takes a ton of effort and consideration to properly run a rental business. As such, there are plenty of things to consider before being a landlord. In today’s article, we’ll go over what a landlord does and seven things you should know before becoming a landlord.
Contents of This Article:
What Does a Landlord Do?
If you’re thinking about owning rental properties, there are several steps to consider. Although it may sound as easy as buying a property and renting it out, there are several important legal steps to follow. Additionally, landlords have several responsibilities regarding owning and managing rental properties. Depending on what type of properties you own and your local regulations, duties may vary. However, as a baseline, here are some of the main things landlords do.
- Maintain the Property- It’s crucial to ensure that the property is in good condition and complies with all health and safety standards. For instance, regular inspections, maintenance, and repairs should be performed regularly to address issues that may arise during a tenancy. However, many busy landlords hire professional Washington, DC, property management to care for their rentals.
- Screen Tenants- Thoroughly screening prospective renters is crucial for finding reliable and responsible tenants. So, landlords should run background checks, verify employment information, and check references from previous landlords.
- Create Lease Agreements- A lease agreement is a legally binding contract that outlines the terms and conditions of the tenancy. Creating a comprehensive lease agreement that includes the rental amount, security deposit requirements, lease duration, maintenance responsibilities, and other relevant information is important.
- Collect Payments- Collecting rent from tenants is one of the main responsibilities of landlords. They must establish a system for collecting rent, consistently collecting timely payments, and enforcing late fees when necessary. Additionally, landlords should maintain accurate financial records related to rental income and expenses for tax purposes.
- Follow Landlord-Tenant Laws- Landlord-tenant laws vary by region, so it’s important to stay up-to-date with local laws and comply with them at all times. These laws cover several important points, like security deposit limits, eviction procedures, tenant privacy rights, and more.
7 Things to Know Before Being a Landlord
Being a landlord is a rewarding yet sometimes stressful position to be in. Whether you’re looking to become a landlord or you already are one, you know that there are several important laws to remember. Additionally, there are several important tips to consider for working with tenants. Here are some of the important things to remember before becoming a landlord.
- Remember–You’re Running a Business
- Respect Tenant’s Personal Lives
- Carefully Draft and Enforce Lease Agreements
- The Security Deposit Money Is Not Your Money
- Don’t Get Emotionally Involved With Tenants
- Take Good Care of Each Property
- Don’t Make Deals With Tenants
Remember–You’re Running a Business
First things first, you must remember that you’re running a business. You’re not there to make friends or form relationships with tenants. So, remaining firm and fair with tenants without getting too close or forming personal relationships is critical.
Ultimately, ensuring your interactions with tenants are professional and business-like is important. For instance, you probably don’t want to become friends with your tenants on social media. Instead, you’ll want to keep structures in place while interacting with tenants.
Respect Tenant’s Personal Lives
It’s important to put yourself in your tenants’ shoes sometimes. Remember, they’re the ones living within the property, not you. So although you own the property, you don’t necessarily know what’s going on behind closed doors. So, it’s important to respect their home life and personal belongings.
Carefully Draft and Enforce Lease Agreements
If you put something in the lease agreement, be ready to enforce it. You don’t want to put anything in your lease agreement just to scare tenants that you wouldn’t actually enforce. For instance, if you include late rent fees in the agreement, you have to charge them when a tenant pays late.
Additionally, don’t give some tenants the benefit of the doubt when you wouldn’t give it to others. This could be seen as discrimination and unfair rental practices. Remember, the lease agreement is a contract that you and your tenants are legally bound to. So, both parties must follow the lease rules to a tee to avoid legal disputes.
The Security Deposit Money Is Not Your Money
One of the top reasons for landlord-tenant disputes is security deposit issues. So, being clear and communicative with your tenants regarding their deposit and what it’s used for is a crucial business practice to follow.
Always remember that when a tenant pays you a security deposit, it’s not actually your money to spend. It’s the tenant’s money that you’re holding onto in case they don’t follow the lease agreement properly. So, it’s important to put it in a business account, separate from your personal bank account, to avoid commingling of funds.
Don’t Get Emotionally Involved With Tenants
It’s important to separate business and personal relationships–and not let them mix. So, don’t get too wrapped up in a tenant’s personal life to the point where it affects how you treat your business.
For instance, doing personal favors for tenants, like lending them money or consistently letting them pay rent late, could cause you to lose rental income. Remember, you’re running a business, not working with friends, so you’ll want to treat it as such.
Take Good Care of Each Property
It’s your job to take care of your rental property and ensure tenants take care of it, too. After all, it’s your rental business, so you’ll want to ensure everyone’s doing their part to keep it afloat. For instance, you’ll want to inspect the property regularly, fix any major damages, and ensure tenants report all maintenance and repair issues.
While inspecting your properties, if you notice that a tenant has caused damages or trashed the premises, don’t just ignore it–enforce your lease agreement. You may hear excuses from your tenants about the property, but ultimately you’ll want to refer to the lease agreement for property damages caused by tenants.
Don’t Make Deals With Tenants
Some tenants may try to make deals with their landlords to lower their rent payments. For instance, your tenant may offer rental maintenance in exchange for discounted rent. However, this isn’t a great business practice, as it’s hard to track and enforce what maintenance they do and how much of a discount they get.
Instead, you’ll want to keep it simple–they pay rent, and you take proper care of the property. That way, enforcing lease terms is easy, and nobody gets confused about their responsibilities.
Stay In-Check With Property Management
Although it may seem like it sometimes, being a landlord is much more than owning and renting a home. Being a good landlord takes a lot of time, effort, and consideration. So, remember to treat all of your tenants fairly, properly maintain all of your properties, and keep your business and your personal life separate.
One of the simplest ways to ensure compliance for each rental is with a professional management company by your side. Bay Property Management Group offers comprehensive rental management services throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC. Contact BMG today to learn more about our services, including rental marketing, tenant screening, maintenance, rent collection, and more.