Owning a rental property can be one of the best ways to build wealth in any economy. It offers a fairly stable and somewhat passive income, and if you want out of the business, you can sell your property rental successfully as it is usually a fairly liquid business. But being a landlord isn’t as they say, all sunshine and rainbows. Ask anyone who’s ever done it and they’ll tell you that their biggest concern is dealing with bad renters. Although it shouldn’t happen very often, occasionally you can get a tenant who won’t pay rent, damages your property, or just causes problems. But if you take some precautions, this doesn’t have to happen to you.
Invest in the right property
The best way to avoid bad renter issues is by investing in a property that will attract good tenants. This usually means buying quality real estate in the desirable neighborhoods. But even if you’re starting out with property in a more median range, it’s important to make it the best it can be. In other words, make improvements to keep it up-to-date and make necessary repairs as soon as they’re needed. Renters want good landlords just as much as you want good tenants.
Screen your tenants
Your first and best defense against bad tenants when Owning rental property is to thoroughly screen them before you agree to let them move in. And it’s a much easier process than you might realize. You can simply use online tenant screening software and let it do all the work for you. With such solutions, you will be able to conduct background checks that should pull up credit reports, criminal convictions, and previous evictions. In addition to checking their online records, you’ll also want to check their references. They should provide you with previous landlords and other references if you require. Don’t fail to follow up with them. Ask if they paid their rent on time, damaged property, or otherwise caused any problems while they lived there.
Draw up thorough contracts
If you’ve never rented out property before, you might not know exactly what information should be included in a lease agreement. Or maybe you’ve realized, after a bad tenant, that you missed something that needs to be added. Either way, don’t just print an agreement off the Internet and assume it will suffice. It’s worth consulting your local government authority or even a local attorney before you draw up your papers so they can cover all the legal matters you may not be able to think of. This is especially true with your first property.
Attract good renters
In addition to doing what you can to make your product worthy of quality tenants, it’s also a good idea to decide who those tenants will be. Many experts recommend making a tenant profile with certain criteria each renter must have. For example, you might want to only rent to someone with a credit score above 620, or you might want them to have a monthly income of at least three times the rent amount. Just make sure that your criteria doesn’t cross the line on discrimination. Keep in mind that things like race, religion, sex, color, national origin, disability , and familial status are protected under the Fair Housing Act.
Hire an attorney
No matter how many precautions you’ve taken, hiring an attorney isn’t just a good idea for taking care of your paperwork. But you may also need one down the road to take care of tenant issues such as if someone gets hurt on your property or threatens to sue. It’s important in these situations not to wait to be served. Go ahead and consult with an attorney like the ones at Davis Kelin Law Firm to make sure you do everything right. They can advise you on the best course of action for your situation, as well as helping navigate specific situations in a proper legal manner.