First time landlord checklist before having tenants on property
You will never forget the experience of getting the first tenant to live on your property. It is going to be both exciting and intimidating at the same time. You are required to have the right mindset, smooth operations, and a good habitable place before you make it open for tenants to move in. The prospect who visits your property and leaves without having a good mark will be a waste of a potential customer.
Becoming a landlord for first time can give you a hard time if you are not prepared. It becomes trouble for new landlords to rent their place if important things are not set up in place. Nobody wants to lose a customer. But once the customer was gone, you are not going to see him ever again on your property. There are a lot of things to consider before getting the prospect to visit your property.
The First Time Landlord Checklist
There is much more than setting up the place to get tenants fast. You additionally need to set up a system for operating your rental business like a pro-landlord. Having the first time landlord checklist can save you time and your hard-earned money.
#1: Ensuring Good Condition of your Property
The first foremost thing for any landlord is to ensure a good condition of his rental property. Your rental property must be in a tenable condition, free from any kinds of harms and damages. Nobody wants to rent a house which is not in good condition. Do what is required to improve your rental house and its nearby surroundings. You don`t want to risk a potential prospect even for a minor flaw in your property.
Make sure the property is clean and the fittings and fixtures are in place. You also need to inspect the electrical appliances if available on your property. The utilities like the heat, plumbing, and electricity should be working properly and should need no repairs. Your tenant needs to have all the utilities in place and working to maintain the quality of their life. The high tenancy rates and fast prospect conversions are waiting for landlords who maintain their property and its nearby surroundings.
#2: Setting up Different Phone Number
Being a landlord, you need to have an additional phone number to take all your business-related calls in work hours. It is important you set up a different phone number other than your personal number. Using your personal number for running a business makes no sense. It can trouble you maintaining a good work-life balance. Getting prospects or tenant calls on your personal number can ruin your personal life.
The prospects and the tenants can call you anytime without even bothering about your comfort and the work hours. Your prospect may call you on your holidays or on non-working hours to show the rental property. The tenants can call you any time of the day if they ever experience any hassle during their stay. You’re a landlord and are running a business here. Neither, you want to mess your personal life and nor your business life. So, it is best to keep both of them separate.
#3: Incorporating your Rental Business
Landlord Incorporation is an important step that a landlord should consider taking on an immediate basis. It is one important step in the direction of protecting your business and your assets. Incorporating your rental business gives your business a sole identity. Your new business now becomes liable for any unfortunate event with your tenants and visitors to the property.
Not incorporating it makes you liable to settle amounts incurred in such events from your personal assets. You can get into legal troubles, huge debt or maybe even bankruptcy as amounts in such settlements are very high. But if you have an incorporation, that means you are not liable personally and no law can touch your personal assets.
Also, running it as an incorporated business; you can take various deductions in tax. You can easily deduct a lot of your expenses from your taxable income which isn`t possible in the earlier case. Incorporating your business, however, includes high costs and lots of paperwork. But you didn’t want to become liable if anything goes wrong in your business.
#4: A Separate Bank Account for Rent Business
You are not doing the rental business for a hobby, rather a full-time business. It demands you to set up a different bank account. Being a full time business, you need to treat it as a separate entity. It becomes very difficult to manage your funds if you take the business payments in and out from your personal account. A good accountability is very important for having a sustainable business. You should have a record of all the transactions in your business. And the only way to do it is having a separate bank account.
Furthermore, it becomes easy for you to manage the cash flow and keeping the amount for necessary expenses. You will be able to maintain your funds in a better way. The tax filing becomes smooth if you have a dedicated account for your rental business. Also, you can save yourself from the hassles if you ever get audited. You can quickly show this separate bank account statements and limit your interaction with the government authorities.
#5: Buying the Right Landlord Insurance
You need to have landlord insurance to cover yourself from any kind of financial setback due to your rental property. With the landlord insurance, you are covered against defects due to short circuit, fire, earthquake, storm, lightning, and flood. You can further opt to cover damages by tenant, terrorism, burglary. Generally, a landlord insurance policy is made to cover your rental property`s structure and its contents from all kinds of possible harms.
Additionally, you can include covers that protect you against loss of income in case your property gets damaged. Right landlord insurance must include a liability insurance cover that can cover costs of legal hassles involve between landlord and the tenant. If you found liable for any harm to your tenant due to your negligence, a liability insurance cover will save you from the cost incurred in settling such issues.
#6: Prepare a solid Marketing Strategy
The competition is all-time high and the prospects have thousands of options to choose from. So, it becomes important you set up a marketing strategy that stands out your property. Everybody today wants convenience. And being in the digital age, prospects mostly search for their new rented home online. They want to have precise details of the property they are going to rent out. So, it becomes important for you to list your property online with all details like the area, amenities, location, etc.
Include professional photographs and a virtual tour of your property to make your listing standing out from the rest. Not only the listing but your behavior and communication skills also matter when you interact with a potential prospect. You have to be helpful and courteous. You should be able to convey your prospects that you’re going to be a good host and not just another landlord. The successful landlord doesn’t mind going the extra mile to help their tenants.
#7: Set up a Rental Application
The Rental application is important to have the right tenants to stay in your property. It helps you run a background check on potential tenants. You can obtain their income report, employment history, earlier occupation details, bankruptcy, and past eviction if any from the rental application. Doing this provides you the tenant`s complete details and you can enjoy hassle-free tenancy on your property. It saves you and your property from any potential damage that can cause you to lose your money.
Setting up a rental application for tenants will help you better understand your tenants. Your tenant must adhere to your guidelines, live peacefully with other tenants and should pay timely rent. Before having the tenants on your property, you must evaluate them being financially and socially capable of living on your property. And, if you find any problem with the tenant`s rental application, you can simply reject them.
#8: Having a Rental Agreement
After you receive a filled rental application from the tenant, you are required to have is a rental agreement with you. The rental agreement clearly specifies the legal terms and conditions of staying on the property. This legal agreement binds both parties i.e. the landlord and the tenant under certain guidelines and set responsibilities. Also, the rental agreement is an important document during the troubles between you and your tenant.
The rent agreement includes the details of the duration of the tenant`s stay, rent amount and the security amount with the landlord. Having a rental agreement is important for a smooth relationship between the tenant and the landlord. Once both the parties enter into a written agreement, the terms and conditions become legally implied. It can`t be changed until both parties agree to it. Moreover, the rent agreement sets the expectations of the tenant about the amount of support they can expect from the landlord.
#9: Set up Deposit Protection
A tenant has to provide a refundable security deposit to stay on your property. This security amount is the entrusting factor of the landlord on his tenant. Having the security deposit ensures that your tenant will keep your business free from all kinds of damages. However, this security amount is refundable. And it has to be used only in case of some damage or violation of the agreement by the tenant. This can be exercised only by giving written legal notice to tenant.
The security amount is refundable and hence is not the property of the landlord. The landlord is not authorized to use it under normal conditions. So, according to law, you have to keep this deposit amount in a separate bank account and return this deposit once the tenant moves out of the property. You can even use a security deposit escrow account for this purpose. The escrow account is a good option to keep the amount safe for both parties.
#10: Prepare Move in and out Document
It is important for you to prepare a document that depicts the move-in condition of the property before your tenant comes to stay in your property. You should clearly document the condition of the property and get the same verified with your tenant. Get your tenant to verify it on the same day they move into the property. Verifying it makes them responsible for any negligence and harm if they do to your property. This way you can charge them easily for the incurred cost of that specific repair without getting into any trouble.
The move-out document is also important as the move-in document. It indicates levied charges if the tenant fails to give the peaceful possession of the property when they move out. You can deduct those charges from the security amount and hand the remaining to the tenant. Having this document ensures maintained property and smooth possession. A maintained and clean property means you have immediate occupancy by new tenants.
The Bottom Line
Before having tenants on your property, it is always better you go through the above checklist. Never let anything go wrong in the way of renting your place.