Many people harbor the dream of becoming proprietors/landlords sometime in their lives. However, very few people planning to invest in the business have facts about what it entails. Like any other business, being a landlord requires one to be prepared at hand for their investment. You must understand the market. That is, its benefits, risks, and what you need to do, so that you can benefit from the investment.
Preparing to become a landlord
1. Understand the relevant laws
Before you become a landlord, it is important that you find out the legal requirements for landlords in the area you are investing in. To be a successful landlord, knowing the legal bounds and safety regulations is very important. Otherwise, you will have to face the law, which can be detrimental to a young investment.
2. Remember you are running a business
Once you become a landlord keep it strictly business. It is good to have a cordial relationship with the tenants, but it should not go overboard.
3. Have a clear and practical tenancy agreement
Formulate a tenancy agreement that matches the property and your needs. You can find generic tenancy agreements online and customize them to meet your needs. Alternatively, you can learn how to make one. If you consider purchasing ready-made agreements, be sure to read the terms and conditions, to see whether they are in line with the property and your needs.
4. Period of tenancy
In the tenancy agreement, it is required that you fill in the length of tenancy. Most preferably, make it a maximum of 12 months and veer off from requests to extend the period up to 18 months. The reason for keeping the tenancy period at one year is to make it easier for you to increase the rental price, in case of inflation and interest rates.
5. Set a realizable rental income
If you do not have an idea on the best rental price to charge, find out! Do a small survey on what other landlords in the neighborhood are charging. Local newspaper and letting websites are the best places to look for such information. Just remember that it is best to have a tenant paying reasonable rent, than to charge a high price and the house to remain empty.
6. Set the right security deposit
The amount should cover, any damage left behind by the tenants when they are vacating. Typically, the amount of the security deposit is equivalent to the monthly rental charge. Details about the deposit should be outlined clearly in the contract.
7. Find legal advice
Prior to becoming a landlord; seek legal advice from a reliable real estate lawyer. They will furnish you with all the legal details that you need to stay away from the law enforcers.
8. Reduce risks
Being a landlord is not easy. Minimize your risks by securing a tenant guarantor to shield you from the effects of rent defaulters. Better yet, get landlord rent insurance.
9. Document all transactions
Written references have a degree of authenticity in them. Therefore, ensure that your interactions with your tenants are recorded. This will help a lot when a dispute arises.
10. Know the rights of tenants
Tenants too have rights and it is important you have them on your fingertips lest you get in trouble. For instance, even though you are the owner; during the tenancy period, you are not allowed to walk in on the property without their permission.
Tenants have rights and so do you. How much should you charge for a given rental? These and more pertinent issues have been discussed in this article.
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