10 Great Tips for First-Time Landlords
Are you a first-time landlord? Perhaps you did not intend to be. While being a landlord may seem overwhelming, we are here to help. Our list of 10 great tips for first time landlords.
1. Know and Follow Fair Housing Laws
Listed first on our list because of its importance. Most important tip for first time landlords! Violating Fair Housing laws have serious penalties. Both legal and financial. Fair Housing laws protect applicants. Different races, color, national origins, religions, sex, familial status and disabilities. Learn the housing laws because they are important.
2. Screening Tenants
Successful landlords understand the importance for selecting great tenants. It is very important. The right tenant will pay rent on time and take care of your property. For this purpose, you should have a thorough screening process. While Burbz offers free tenant screening reports, more information is needed. Request proof of income and bank statements. As well as speak to their former landlords.
3. Collect rent online
Make your life easy. Require your tenants pay rent online. With technology, there is no reason to collect checks or cash. If tenants must pay cash, never collect in person! That is dangerous.
Collecting rent online is easy with Burbz. And free. Tenants never get your bank account information either. If renters pay late, Burbz sends email reminders. Tenant can choose to set up auto payments as well. Throughout the process, you receive emails regarding the status of payments.
4. Provide Attractions
Consider unique features such as pool tables, arcades, or furniture. Firstly, this can increase rent rates. Secondly, it can help your rental be more attractive. Either way, there are financial benefits making your rental competitive.
Fun fact: We put a classic NBA Jam arcade in our rental! Along with a pool table, this rental always has quick turnover.
5. Immediately send notices
There will be months tenants cannot or do not pay rent. Life happens. It is important you continue to follow the lease agreements. Tenants may have legitimate reasons. Or they stopped paying altogether. Either way, it is important to protect yourself. Send all late and eviction notices per lease terms. If lease terms are followed, you have final say whether to collect late fees or evict them. By not following lease terms the tenants can drag out not paying rent for months.
6. Pets: Additional profit
There are two perspectives to allowing pets. Those who oppose. Those who allow. Often pet owners seek homes with yards because of their dog. This is a chance to generate more income. Avoid pet deposits because deposits must be refundable. Pet fees and pet rent are not refundable. Pet rent is a monthly charge and continues until they move. Compared to pet fees which are a one-time fee paid upfront by the tenant. While we love dogs, they are not a protected class.
7. Protect Yourself First
Tenants will request favors. Allow late payment without consequence. Ask for improvements to the property. End the lease early. Pay with Venmo. Etc.
Being a great landlord does not require approving all their requests. It means being fair. There is financial risk being a landlord. Rather than allow Venmo, give the tenant options that protect you. Even if allowed to move-out early, charge rent until a new tenant has moved in.
8. Have a Phantom Partner
Tenants ask for items above-and-beyond sometimes. Pretend you have a business partner and you are only the manager. This provides an easy out when you decide to deny their request. Especially living at the same property, this creates an extra protection.
Fun fact: Warren Buffett started a pinball machine business when he was 17 years old. Business owners complained to Warren assuming he was the technician. Not knowing he was the owner. However collecting money was easier. ‘His boss’ did not allow any late payment exceptions.
9. Know Your Tax Laws
Without a doubt, Uncle Sam will want his share. Before selling a rental property, research the ways to minimize taxes. Consider living in the property for 2 years to avoid capital gains. Of course, you could buy another rental in a 1031 Tax Exchange.
10. Don’t be greedy
Landlords often get a bad name for being rich and greedy. However most landlords are not rich. They are working class trying to earn for themselves. Do not assume everything is the tenant’s fault. Acknowledge when a repair is a tenant vs property issue. Therefore do not pass property repairs onto your tenants.
Occasionally, it is good to treat your tenants. Consider buying tenants dinner or a gift card. Equally a welcome gift goes a long way.