Follow these five simple steps to minimize risk and maximize success as a landlord.
The decision to become a landlord can be rewarding but also challenging. By following these five simple steps, you can minimize your risk and maximize your success as a landlord.
- Always check references– Bad tenants can ruin your rental property, violate the terms of your lease agreement and default on rent, costing you thousands of dollars. Always remember to pre-screen tenants by checking references, pulling credit reports, doing criminal background checks and checking eviction history reports.
- Liability – Make sure to purchase enough liability and other property insurance. It is your responsibility to ensure that tenants are safe and the property adheres to health regulations, government building codes and that you have secured the right insurance for you and the property. Ask your insurance representative about the exact coverage in any policy you consider.
- Maintenance – Repairs are inevitable, and maintenance is the only way to keep your properties in good condition. You will be responsible for any maintenance issues that may arise and it is best to keep your properties properly maintained to prevent further costly problems. A little money now can prevent larger repairs later.
- Get everything in writing – In order to protect your interests and the interests of your tenants, get everything in writing. Beginning with the rental application and lease or rental agreement, be sure to document important facts of your relationship with your tenants including when and how you handle tenant complaints and repair problems, notice you must give to enter a tenant’s apartment and the like.
- Do not discriminate. Follow the Fair Housing Administration Act when you screen prospective tenants. Give everyone an equal chance to rent your property, regardless of their race, religion, or beliefs.
Remember: Being a landlord is not for everyone. There are many perks and perils. Before deciding to become a landlord, purchase or invest in rental real estate, always consult a licensed realtor, attorney and tax professional.
Michigan State University Extension offers financial management and home ownership education classes. For more information about classes in your area, visit either the MSU Extension Events feed orMIMoneyHealth.org.