The added income from a rental property can look very appealing to a young entrepreneur or someone seeking assistance with property payments. A first-time landlord should be acutely aware of the broad spectrum of duties expected from a rental property owner.
Tenant expectations are just as important as the expectations held by local and federal law. Renting out a property is not as simple as collecting money once a month. Here are a few important things every new landlord should know before leasing their first property.
Understand tax laws for property owners
Tax law may be a bit stale, but it is crucial for property owners to understand if they are looking to make money in an entirely legal manner. Take the time to do the proper research before investing time and money into property rental.
There are several opportunities to regain investment funds as well. Tax deductions are the brighter side of the business. Interest, repairs, and regular maintenance costs are all qualified tax deductions. Interest on property loans, mortgage loans, or credit card debts pertaining to the rental property can add up to a significant sum by the year’s end.
Know landlord rights and limitations
Every set of state laws is different. It is important that every new landlord knows their rights before renting their first property. Also, a property lease is a substantial agreement, but the landlord has the legal right to augment that contract at any time with the signature of the current tenant.
Above all, a landlord has the right to get paid in a timely manner. Owners have the right to determine the length of a tenant’s stay, and to legally evict those that do not pay their rent within an agreed upon time.
Know tenant rights and limitations
Tenants are also equipped with rights to protect their best interests. Tenants have the right to a certain amount of privacy. A landlord must notify the tenant 24 hours in advance before entering the property. The tenant also has the right to a safe and proper environment.
The landlord is responsible for making sure the home complies with local and federal housing codes. Also, tenants have the right to the best interests of their security deposit. Some states require the landlord to keep the funds in an interest-bearing account for the length of the lease, so it is best to stay up to date on local laws.
Screen for reliable tenants
It is important that a new landlord has a thorough screening system for potential tenants. Background checks are the best resource available to property owners for screening interested renters. They will provide valuable information on the potential client’s rental history.
It is best to make contact with a minimum of three credible references after initially meeting the clients. If it is a long distance rental relationship, then there are other agencies that will assist landlords with the process of tenant screening, like the National Tenant Network.
Decide what type of relationship is best
Before ever renting the first piece of property, a landlord must first decide what kind of relationship will be most suitable for doing business. Some property owners do very well building a friendship or partnership with their tenants. Some property owners are better landlords when they communicate in strictly business terms.
The nature of the newly formed tenant-landlord relationship should be clearly conveyed prior to signing a lease. Painting walls and changing fixtures are not always in the best interest of the owner and should be discussed before the property is rented to the prospective tenant.