Becoming a landlord is a great way to make some passive income if you can afford the initial investment. Not only do you add a property to your financial portfolio, but it allows you to earn a monthly payment from renters. They get a place to live, and you get the necessary income to keep your property well-maintained.
However, landlords often earn a bad reputation when they don’t fulfill their responsibilities. Too many fail to stay in touch with tenants or address their concerns in a timely manner.
Here’s how to be a good landlord in Memphis, TN, and what you should focus on.
Becoming a Landlord Legally
The first, and arguably most important, thing you should do is make sure that your rental is above board. That means the property itself allows rentals and that it won’t get you or your tenant into legal trouble.
Some examples of illegal rentals include renting out a rental without the landlord’s permission. While sub-rentals aren’t against the law, you risk breaking your lease.
Another consideration is the type of space you’re renting out. For example, some zoning laws prohibit you from renting out a basement unless it has a separate entrance and proper ventilation.
Understand the Types of Landlords
Determine what kind of landlord you’re going to be before you start renting out a property.
Some investors rent out their properties as a way to help them make some income before they sell. Others do so because they intend for it to be their primary source of income.
Regardless of your reasons, it’s important to be the type of landlord that treats their tenants as a priority. Either you take the extra time out of your schedule to stay in touch with them or hire a property management company that can do it on your behalf.
Screen Tenants Thoroughly
Whether or not a landlord is good partially depends on how their tenants see them. As such, you should make sure to only rent out to people who you have screened.
One way to do so is by asking them a few questions.
Can they confirm their income, and is it enough to cover their rent? Do they have pets and would they be willing to pay a pet deposit? Have they ever gotten into legal trouble before, and can they explain when and why?
You’ll also want to run background checks on them to verify their responses. You can get their permission to do so through the rental application form.
Fill Out a Condition Report
If you want to protect yourself, you may want to fill out a condition report. A property condition assessment or report evaluates how much you’d have to spend to maintain your property. When it comes to renting, it means figuring out the current condition of the property just in case there are any damages caused by renters.
It’s all too easy for a renter to claim that some structural damage was there when they moved in. As such, make sure to take as many photos and videos as you can before and after they sign the lease.
Document All Transactions and Agreements
Another way to protect yourself and your tenant is by documenting all transactions and interactions you have with one another.
Get everything in writing and never settle for a verbal agreement. It’s all too easy for either party to go against a verbal agreement, as they’re not legally binding.
Similarly, make sure you keep track of any expenses. Damages caused by the tenant should either come out of their pocket or their security deposit.
Purchase Renters Insurance
Renters insurance benefits both landlords and renters. it protects a tenant’s personal property and belongings when they’re in a rented apartment or home. If there’s a break-in or some kind of natural disaster, the insurance can help pay for those lost possessions.
The reason you want to require this as a landlord is to stop potential lawsuits. A tenant could always claim that you didn’t provide enough security on the premises to keep thieves away. They may also say you didn’t do anything to answer their concerns.
Know Tenant and Landlord Laws In Your State
Take some time to look up the tenant and landlord laws in your particular state and county. While your lawyer can advise you on legal matters, it helps if you already know some of your limitations.
For example, Tennessee law doesn’t limit the cost of a security deposit. However, that amount must be returned within 30 days of tenant move-out.
If a landlord fails to make important repairs, a tenant can “repair and deduct” the cost from their rent. At the same time, a tenant can’t prevent a landlord from entering their home to make repairs.
Have a Clear Line of Communication
One of the best landlord qualities is someone who listens to their tenants. A tenant should never struggle to get in touch about problems they’ve encountered.
You don’t need to give them your private cell number, but they need some way to get in touch with you. That may be through your secretary, email address, or social media pages.
On the same note, inspect your property often. This applies even if you have a property management company to handle maintenance on your behalf. There may be issues that get overlooked or things you personally want to change.
Hire a Property Management Company
The best thing any landlord can do when they have multiple properties is to hire a property management company. These help handle the daily tasks so you can focus on other things, such as your day job or your other investments.
You’ll know it’s time to hire a property manager when you find yourself struggling to keep tenants or handle the legal aspects of renting.
Become a Successful Landlord
Wondering how to be a good landlord in this day and age? Try putting your renters first when it comes to transactions and communication. A tenant that respects their landlord is going to be much easier to negotiate with than otherwise.
If you want more landlord tips or advice, look no further than Reedy & Company. We offer property management for both single-family and multi-family homes. Contact us to learn more and ask any questions.