Over 44 million households in the United States rent. As housing prices continue to rise, more and more people are renting instead of buying. If you’re a first-time landlord, you need to prepare to start bringing in all of those potential tenants.
Being a landlord might seem like easy passive income, but there’s more to it than you’d think. We’re here with some quick tips for new landlords to help you start your property investing journey. Read on to learn more.
1. Use an Online Tenant Portal
A long time ago, collecting rent and communicating with tenants was straightforward, but slow. You did everything by mail, in person, or over the phone.
While you can still do that, it’s not very convenient, and new tenants aren’t going to be happy with that arrangement. Almost no one wants to pay in cash, and checks are becoming redundant. Most people don’t even love talking on the phone anymore.
You need to find a way to let tenants pay their rent and communicate with you online.
Yes, you could just do things via email, but if you have several properties or if you just have a hard time keeping up with emails, this won’t be efficient for anyone involved. Instead, set up a tenant portal.
Tenant portals give tenants a quick and convenient way to submit maintenance requests, send messages, and pay rent. They can also notify tenants when rent payments are due or even collect rent through an auto-withdrawal.
Bonus tip: you can also add another online system for rent reporting. This will help you keep track of (and even prevent) rent arrears, and it will make renting better for your tenants.
It allows tenants to include rent payments on their credit scores. This helps them build equity, which previously wasn’t possible as a renter (at least through housing).
In short, use technology to your advantage, even if it’s not the “classic” way to do things.
2. Pets or No Pets? Decide Carefully
Too many new landlords don’t consider whether or not they should allow pets on their property. This shouldn’t be a quick decision.
70% of U.S. households have pets, so you’re going to encounter potential tenants with furry friends. What are you going to do?
On one side, pets can damage your property if they’re not well-trained. They may also increase your legal liability. It’s also possible for some of your current tenants (if it’s a multi-family property) to want to avoid pets, so they may be upset if a pet moves in.
On the other hand, you’re excluding the majority of households if you have a no-pet policy. Allowing pets will make your property more appealing and you’re less likely to experience extended vacancies.
We recommend allowing pets but consider your own personal restrictions.
You can have size or breed restrictions. Some properties only allow cats or small dogs. This will still open you up to many new tenants.
You could also charge a pet fee or a pet rent. Pet fees are one-time non-refundable deposits and pent rent is a small fee added to the tenant’s rent every month.
You could also ask tenants with pets to get renter’s insurance.
These options will cover you if the pet does cause expensive damage that the security deposit won’t cover.
3. Keep Up With Routine Maintenance
Too many landlords think that they should only bother with maintenance when someone requests it! While responding to maintenance requests is crucial (more on that next), you also need to keep up with routine maintenance if you want a high-quality and profitable property.
Think of yourself as a tenant. Would you want to live on a property where the driveway is all cracked and broken, the HVAC is always on the fritz, and the carpet in the hallway was torn to shreds?
As a landlord, you want to keep your properties in good working order. Do routine checks on things like plumbing and HVAC and make sure that you maintain the common areas. It’s even a good idea to hire a landscaper.
This might seem like an unnecessary cost, but it will keep your tenants happy and it may prevent costlier maintenance emergencies in the future.
4. Respond to Maintenance Requests Right Away
Speaking of maintenance, make sure that tenants can send in maintenance requests at all hours. While you may not be able to respond immediately, you should respond as soon as possible, especially if the event is an emergency.
Your tenant has the right to a safe and habitable living space, so if a maintenance problem is causing significant damage, you need to fix it or find another place for your tenant to stay.
Attending to requests quickly will help you prevent those emergencies in the long run.
For example, let’s say that your tenant has a leaky sink. That leak might not seem like a big deal at the moment, but there could be an obstruction causing it that could become catastrophic. Even if that’s not the case, that small leak can lead to mold, which is a health hazard to your tenants.
Even the smallest issues should be addressed right away. Keep local contractors on call for these types of situations so your tenants never have to wait too long for help.
5. Improve Your Property Whenever Possible
You should always be striving to improve your property when it’s possible to do so.
Not only will this make your tenants happy, but it will also keep your property in better condition and keep your vacancies down (even if you choose to raise the rent).
Your improvements will vary depending on your budget and what you’re allowed to do with your property. Not every landlord can add a pool or a gym, but every landlord can update the flooring, for example.
Look at other local rental units that are within the same price range as yours. What do they have that your properties don’t?
Maybe it’s time to add new appliances or swap out your carpets for hardwood floors. It could be time for a keyless entry. There are plenty of ways to improve a property even with things that aren’t “luxuries.”
Yes, improvements are expensive, but they’ll pay off. Updated appliances need fewer repairs and are often more energy-efficient. They’re also attractive to potential tenants, so you’ll have shorter vacancies.
6. Keeping a Tenant Is Always Best
Too many landlords make the mistake of raising rent and ousting current tenants to bring in new tenants who will pay the higher prices. This is never the right idea. Even if a tenant is being problematic, keeping them is almost always the right option as long as you can work out the problem.
When you have a rent-paying tenant in place, you’re getting consistent money every month. You don’t have to pay for advertising or lose rental income while you’re looking for new tenants.
Yes, it’s tempting to raise the rent far beyond what the tenant is currently paying in hopes that someone else will pay it, but this isn’t a guarantee. You should always be trying to get tenants to renew their leases.
This may require negotiation sometimes, especially if your tenant lives in a unit that hasn’t been updated while other units in the building have.
Tenants may try to negotiate rent prices, and they have every right to do this. Work together to find a solution that will end in your tenant renewing the lease instead of leaving if at all possible.
7. Consider Investing in Property Management
If you’re only managing one property (for example, a room or apartment on a property that you live on, or one house), you can likely do it on your own, even if you have a day job and other responsibilities to take care of.
If not, consider investing in property management. A property management company will take over a lot of the “behind the scenes” work. They know how to screen tenants, how to market your property, how rent is determined, and more.
They’ll also usually set up an online portal for you and connect you with local contractors for your maintenance needs.
This isn’t a must-do for a first-time landlord, but it might be helpful.
Use These Tips for New Landlords
These tips for new landlords won’t make your property investment a breeze, but they will help get you started. Remember: your goal is to have happy tenants who want to renew their leases. There are several things to do as a new landlord to reach that goal.
Good luck with your property investing venture!
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