Tips for Becoming a Landlord
Having a second property used as a rental can be a great investment. More often than not, being a landlord and having a successful rental property can be a very rewarding and profitable business venture, but just like with all aspects of life, things happen and you need to cover your assets. Rental Property Insurance or Landlord Insurance as it’s often referred to is the best way to keep your investment safe. If you are thinking about becoming a landlord, here are some useful tips.
Screen Your Tenants
Finding tenants that you believe to be trustworthy is very hard. As a landlord, you are in control of who you allow to rent your property. If having the property in excellent condition is very important to you, having tenants that you believe will treat it as their own is something you should look for. Some of the more common ways to evaluate any potential tenants are to perform a background check, look into their credit score, and contact anyone they may have listed as a reference. The better the tenants, the less likely they will do anything that may cause damage to the property. Having tenants that you trust will (hopefully) help reduce the chances of you having to use your Rental Property Insurance to fix any damaged property.
Inspect the Property Before Renting it Out
Making sure your rental property is up to par before you rent it out has to be a priority. More often than not, landlords will just clean up the home before a tenant starts renting it. Although this isn’t a bad thing, there are many things to check before allowing your renters to move in. It is highly recommended that you get a thorough home inspection by a qualified professional so you can fix any critical maintenance issues. By doing this, you will prevent any headaches while the tenant is there if something important needs to be fixed.
Make Sure Your Tenants Have Renter’s Insurance
Although you will have insurance coverage on your property, you should require your tenants to have Renters Insurance as well. Renters Insurance benefits both renters and landlords in different ways. For tenants, Renters Insurance covers their possessions in the event of damage to the home and/or theft. Along with protecting their belongings, Renters Insurance covers accidental damage tenants may have caused to the property along with injuries to guests.
Landlords benefit from Renters Insurance as well. In the event of something happening to the property and your tenant’s belongings are lost or damaged, you will not be on the hook for them. Same goes for injuries to visitors. This reduces the risk of any possible lawsuits due to the fact that the tenant’s Renters Insurance will cover it.
Make Sure to Have a Written Lease
As a landlord, it is highly suggested that you have a lease for any and all tenants you may have renting your property. A lease by definition is “a contract by which one party conveys land, property, services, etc., to another for a specified time, usually in return for a periodic payment”. Leases usually have specific guidelines that will need to be followed by the renter such as:
- How much of a security deposit is needed before the tenant(s) move in
- Amount charged for rent on a monthly basis
- When rent will be due each month and how it will be paid
- A list of all tenants renting the property
- Eviction terms: not paying rent, damaging the property, etc.
A written lease is a legal document that protects you as well as the tenant, so as the landlord, it is your responsibility that the lease covers all bases. As a precautionary measure, it is suggested to have a Lawyer look the terms of the lease over to make sure you didn’t omit any necessary details.
Set Ground Rules
Having set ground rules before the tenant moves in is a great way to help protect your property. Some of the more common guidelines that landlords have are:
- Smoking policy in or around the home
- Pets: whether you can have them, and what kinds of animals are allowed
- Routine maintenance: lawn care, snow removal, etc.
The best way to give the tenants renting your property a set of ground rules is to speak with them in person so if they have any questions about anything you can clarify. Also, it is important to state the same things in the lease as you told them. After the terms of the lease are agreed upon, both parties need to sign it so everything discussed is in writing.
Being a landlord comes with great responsibility and the need for organization. Between evaluating potential tenants, making sure your property is ready to be rented out, and having to deal with all the proper paper work, being the owner of a rental property is a big undertaking. The life of a landlord can be very hectic but can have a tremendous upside if all the proper precautions are taken.
Being a landlord is a high risk, high reward opportunity, but it could be a very successful business venture if done right. Contact the professionals at Ion Insurance to help take the guess work out of insurance so you can get the right coverage for your rental property today!
