Acquiring a rental property and becoming a landlord isn’t the most glamorous job. You have to deal with all sorts of personalities, and you’re going to be bombarded with calls about broken toilets and lost keys. However, many people still do it because it’s a lucrative business.
If you’re new to real estate management, you’ll have to go beyond the basics. There’s a lot more to being a landlord than buying an apartment building and renting it out. If you want to succeed in this field, you need to have the right legal protections in place. Hiring a civil attorney and being proactive with any issues will save you from headaches and litigation down the road.
Here are a few things you need to keep in mind when managing a rental property:
1. Put everything in writing
This should be a no-brainer, but putting everything in writing is your greatest legal protection. It transforms handshake deals to legally binding agreements and creates a paper trail you can use to protect you and your tenant.
For starters, the rental and lease agreement is the most crucial piece of paper you’ll need. It outlines the arrangement between you and your tenant and grants you specific rights that you wouldn’t have without proper documentation. Many tenant disputes can be solved simply by referring to the lease agreement.
2. Collect a security deposit
Many tenants think that the security deposit is just an attempt at a cash grab by greedy landlords, but it serves a more important purpose. The deposit helps ensure that the tenant will take care of the rental unit. It also motivates them to keep the rental unit in the same condition they found it in.
Should the tenant damage the rental unit, you can use the security deposit to pay for repairs and replacements. To cover your end, make sure to give your tenant an inspection worksheet to allow them to inspect the initial condition of the rental unit.
3. Vet tenants
One of the primary responsibilities of a landlord is to attract and vet tenants. It helps if you think of tenants as applicants and your rental property as a job opening. You want to get the best person for the job, and the only way to do that is to check their background.
For starters, applicants need to fill out a rental application so you’ll have all the information you need to make a decision. It’s not uncommon for tenants to lie on their application, so you need to verify their application by checking their employment and credit history. You can do this by asking for a credit reference and an employment verification letter.
4. Know your rights
Landlords have legal rights to protect them against tenants. For instance, a landlord has the right to enter the rental unit for repairs and preventive maintenance after the tenant has been given advance notice. You can also evict tenants if they violate the terms of the rental and lease agreement.
These legal pointers will help you better protect yourself from the realities of being a landlord. It pays to make smart decisions, so you need to put everything in writing. Vetting and security deposits also ensure the long-term security of your rental property.