Being a good landlord is a balancing act. It requires keeping your properties in good condition, managing your finances properly, and, of course, ensuring your tenants are happy. (It's usually less expensive to retain renters than to find new ones, or worse, have vacancies).
When you're just starting out, it can be a lot to handle -- especially if you're working a full-time job or juggling other obligations at home.
Want to make sure you're on top of your game as you manage your first rental property? Here's how to be a good landlord.
Screen your tenants thoroughly
Choosing the right renters is critical, both for your sanity and your business. Have a comprehensive tenant screening process in place, and make sure your rental application is thorough, too. For every prospective tenant, you'll want details on their past landlords (so you can follow up) as well as info on their employment, income, and credit to ensure they're a safe bet to pay the bills. Just make sure the application -- and your entire screening process in general -- is in line with fair housing laws.
If you're not into screening tenants manually (or you just don't have time for it), there are lots of tools out there that can do it for you and ease the process.
Conduct both move-in and move-out inspections
Move-in and move-out inspections can help ensure you're not stuck paying for property damage done by the tenant. Require renters to complete a room-by-room move-in checklist before settling in, and conduct your own inspection upon every move-out. Compare the two inspections to determine what damage was done as well as what you should hold back from the tenant's security deposit before returning it.
Move-out inspections are a good way to spot potential maintenance and general wear and tear issues as well. You'll want to address these before any new tenant moves in.
Have an iron-clad lease
Your lease should cover more than just the basics of what rent is and when it's due. Get detailed, and include clauses that address guests, occupants not on the lease, late payments, renewal options, parking, and more. You should also include what maintenance tasks and utilities you're responsible for and which ones the tenant will need to take care of.
Always have your lease agreement reviewed by a qualified attorney, too. You'll want to be sure it will hold up in court should you ever find yourself in a legal battle with a tenant.
Set aside the time for it
It takes time to be a good landlord -- especially if you have multiple properties or units. In addition to the maintenance and repair requests you'll need to handle, there's also the business side of things: the accounting, the administrative tasks, and the marketing and screening when you're on the hunt for new tenants.
Make sure you set aside time for these tasks, and give your tenants at least a few chunks of each week for "office hours" when they know you can be reached by phone or text. This is especially important if you're working a full-time job on top of landlording. (You probably don't want renters calling you at work.)
Get help where you need it
You might be the landlord, but don't feel like you have to do it all alone. Focus on the tasks that are in your wheelhouse, and outsource to experienced professionals those that aren't. This might mean hiring a bookkeeper or accountant, bringing in a property management company, or having a stable of contractors on call in case of any repairs requests.
Require rental insurance
Renters insurance largely protects the tenant, but there are benefits to landlords, too -- especially if there's some sort of disaster at the property, like a flood or fire. It can also protect you against litigation if a pet causes injury on the property or your renters' belongings are damaged or stolen from the home.
Asking a tenant to provide proof of renter's insurance is also just a smart way to assess how responsible and financially capable they are.
It can be easy to only talk to tenants when they need something or the rent is due, but lack of communication can really come back to hurt you. Keep in regular contact, and make sure your renters are aware of upcoming deadlines -- like when their lease is expiring or when they need to give notice of renewal or move-out.
You should also be proactive about your rent. Long before a tenant is due to renew their lease, do a market analysis to see if your rents are still on par. If they're not, you'll want to talk to the tenant early about potentially raising the rent.
Focus on retention
Vacancies are costly, and it takes a lot of work and time to find a new tenant. For these reasons, it's important to really focus on retaining your renters -- especially the good ones who pay on time and take care of the property.
Have a good tenant? Make sure you respond to repair and maintenance requests quickly, keep the lines of communication open, and do what you can to make sure they're happy and taken care of.
Have an exit strategy
At the end of the day, you can't predict the market, so make sure you have an exit strategy for your property just in case. If the market turns and you're unable to find a renter for months on end, what's the plan? Will you sell the property? Turn it into an Airbnb? Renovate it and live in it yourself? Map out your options just in case things go awry.
The bottom line
It takes a lot of work to be a successful landlord, but it's not impossible by any means. Just focus on finding and retaining great tenants, get your ducks in a row lease-wise, and have a plan for how you'll handle the business side of things. If you're still unsure of how to make your rental business a success, consider finding a local real estate mentor who can guide the way.