The natural next step for a real estate investor is to become a landlord for the newly purchased income properties. You don’t always have to go with the option of being a landlord, but most real estate investors find themselves going down this path.
This is the case due to the major advantage of being a landlord: it tends to save on the costs of income properties, specifically professional rental property management fees.
Once you do decide to become a landlord, it becomes a whole other playing field. You may have mastered buying investment property at this point, but if you can’t manage your real estate investment property and be a successful landlord, you’ll find your real estate investing career ended quicker than it started. You don’t want to be forced into selling your income properties because you couldn’t hack it as a landlord.
To prevent this from happening, we’ve put together the ultimate list of the best tips for rental property owners and landlords.
Tip #1: Rental Income Properties vs. Rental Properties- Change Your Vocabulary
As a new landlord, you need to change up your vocabulary. Landlords often use the word rental properties. A successful landlord, however, uses the word rental income properties. What’s the difference? Believe it or not, becoming a successful landlord has a lot to do with mentality.
If you focus on your rental properties from the start as being part of a real estate investing business, you’ll be paving the way to success. This business mentality is why we like the word rental income properties. It reminds a landlord that the #1 goal of being a landlord is to focus on the rental income. That’s what a real estate investing business is all about.
Find the best rental income properties now. To start looking for and analyzing investment properties in your city and neighborhood of choice, click here.
Tip #2: You are a Real Estate Investor First, a Landlord Second
Bringing us to the second of our tips for rental property owners: keep in mind that you are a real estate investor first and a landlord second. This goes hand in hand with Tip #1 and using the word rental income properties.
To clarify, let’s look at how a landlord might handle rent collection vs. a real estate investor:
A tenant is behind on rent a few months. The landlord has contacted the tenant a few times to no avail. Soon, the landlord finds him/herself behind on fees for the real estate investment property.
A real estate investor would not allow a tenant to be behind on rent for more than a month. He/she would contact the tenant and if ignored, would start the eviction process (depending on the lease agreement, of course). After all, the real estate investor views income properties as a real estate investing business.
There is an exception, of course. If a tenant reaches out to the landlord/real estate investor and explains why the rent is late, it’s possible that an arrangement can be made. This is if the tenant has been an ideal one thus far and has a legitimate excuse. You don’t want to ruin a good landlord-tenant relationship. You want to be understanding when the situation calls for it and aggressive otherwise.
Tip #3: Find and Finance the Best Income Properties
At this point, you may already have your real estate investment and are looking for tips for rental property owners. Or you may not have purchased any rental income properties yet and instead are preparing for the journey of becoming a landlord.
Well, for the second case, the journey of becoming a landlord (a successful landlord) starts with finding the best income properties and securing the best real estate investment loans for them. The best rental income properties will ensure that you always have tenants in place and the best real estate investment loans will allow you to pocket a good amount of the rental income as profit.
Related: How to Find Investment Property for Sale Quickly and Easily
How can you find the best rental income properties? Use an investment property calculator. An investment property calculator will help a real estate investor find a property that brings the best return on investment. Once you find such an investment property, securing financing shouldn’t be too hard as mortgage lenders look at the return on investment potential of income properties.
To learn more about our investment property calculator, click here. To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
Tip #4: Set Up a Reserve Fund for Income Properties
A successful landlord sets up a reserve fund for income properties right from the start. Many landlords even set this reserve fund aside while planning for the payment/down payment of real estate investment loans. In this way, they “force” themselves to prepare this reserve fund for a rainy day in advance.
Tip #5: Consider a Real Estate Limited Liability Company
One of the very best tips for rental property owners is to consider forming a real estate limited liability company. A real estate limited liability company allows for income properties to be their own legal entity; all of these assets become separate from the personal assets of a real estate investor. Protect yourself from lawsuits or any other issues- your real estate limited liability company and its assets will be liable only.
Tip #6: Renovate for Higher Rental Income
Being a landlord means making the call on what to renovate in income properties and what not to renovate. It seems like a simple real estate investing decision, but that isn’t always the case. You need to study any renovations to ensure they actually lead to a higher rental income or an increased demand for your income properties. Of course, a successful landlord doesn’t neglect necessary repairs.
Tip #7: Become a Landlord of Airbnb Income Properties
A first time landlord has two options: become a landlord for long term income properties or Airbnb income properties. As a new landlord, Airbnb income properties can be quite a challenge in terms of rental property management. But, if you’re up for it, you’ll find yourself making more rental income than with long term income properties. Make this real estate investing decision early on as investing in Airbnb income properties affects the choice of where to invest in real estate.
Tip #8: Understand Real Estate Laws and Fair Housing Laws
Successful rental property management relies on knowing not only local real estate laws but fair housing laws as well. Research local laws thoroughly and even enlist the help of a real estate attorney to make sure you don’t violate any laws. A landlord can end up paying very high fees for the smallest violations. Don’t let that happen to you.
Related: 6 Landlord Laws and Concerns You Should Be Aware Of
Tip #9: Market Income Properties Effectively
While newspaper ads and lawn signs can be a part of your marketing strategy for income properties, that can’t be all you use. Those marketing techniques have proven to be ineffective on their own. To be a successful landlord, use all means of marketing at your disposal. Whether it is online ads or even an advertising company for income properties, do everything you can to get tenants renting your income properties right away.
Tip #10: Take Out Landlord Insurance and Renters Insurance
Becoming a landlord can leave you open to many different liabilities. It is necessary then, to take out landlord insurance. This will cover income properties, lost rental income, and even any injuries that occur on or near the income properties.
Additionally, a successful landlord requires renters insurance from tenants. While security deposits can cover most damages done to income properties, sometimes it isn’t enough. Even landlord insurance might not cover everything. In this way, you provide further security for yourself and even for your tenants’ belongings.
Tip #11: Clearly Outline Pet Requirements in the Lease Agreement
Often neglected when listing tips for rental property owners is the inclusion of pet requirements in the lease agreement. Sometimes, in order to increase demand in a competitive housing market, landlords have to allow pets to stay in income properties. Whether for Airbnb income properties or long term income properties, outline the following in the lease agreement:
- Type of pets allowed
- The pet deposit (how much tenants will pay and if it’s refundable)
- Any additional rent paid because of pets
- What the pet owner is liable for
- Consequences for pet violations (eviction from rental income properties, fines, etc.)
Tip #12: Thoroughly Screen Tenants
Part of being a successful landlord relies on finding good tenants. Don’t neglect the tenant-screening process. Perform in-person interviews, ask for references, job history, and even credit score. Every precaution you take will be worth it when you have great tenants in your income properties.
Related: How to Pick the Perfect Tenant from Multiple Applications
Tip #13: Record Investment Property Condition
Before and after tenants rent your income properties, be sure to document the condition of the place. Take photos or videos and record time and date for everything. This way, you can back up any claims to withholding the security deposit and avoid legal battles because of lack of evidence of damage to income properties.
Tip #14: Inspect Income Properties Regularly
To prevent damage and identify needed repairs, perform inspections of the income properties regularly. These inspections can be outlined in the lease agreement as being quarterly or annually. Still, give 24-hour notice to tenants as to not invade their privacy.
Tip #15: Take Care of Investment Property Repairs Right Away
Try to get to repairs quickly after you spot them during inspections or when tenants report them. This will prevent any further damage from occurring on your income properties. Also, the faster you attend to repairs, the better the landlord-tenant relationship. Tenants will feel you care enough to get repairs done quickly and this is important.
Tip #16: Preserve the Landlord-Tenant Relationship
This brings us to the next of our tips for rental property owners: even though we suggest being aggressive when it comes to getting the rent paid on time, it’s important to take care of the landlord-tenant relationship. Rental property management will be made all the much easier if the landlord-tenant relationship is a good one. This goes for Airbnb income properties as well. Listen to their complaints, take action where you can, and respect the privacy of your tenants.
Tip #17: Team Up with the Right People
Being a landlord, you may have to work with other real estate professionals from time to time. Working with the right people can take you far in your real estate investing business. Try to get references from within your real estate investment network when it comes to real estate lawyers and even contractors and handymen.
Tip #18: Get Organized with Software
Being a landlord becomes so much easier when you are organized. This means keeping records of all expenses, receipts, lease agreements, eviction notices, etc. This can make all the difference when it comes to both tax deductions on income properties as well as any legal issues that arise.
One of the best tips for rental property owners? Consider using rental property management software. There are a lot of options out there to keep a landlord organized, even ones specifically for Airbnb income properties. Rental property management software can often aid in tasks such as marketing a real estate investment property, preparing and signing lease agreements, collecting rent, and handling contact with tenants. Becoming a landlord has never been easier thanks to modern technology. Don’t attempt rental property management without it as a first time landlord.
Tip #19: Consider the Alternative to the Eviction Process
Many aspects of being a landlord are not so pretty, especially the eviction process. While you have to be fully prepared to go through the eviction process when tenants don’t pay rent, consider the alternative: cash for keys. Many landlords avoid the long, expensive eviction process by offering cash to tenants in return for them vacating the property. It often works as these tenants can be in need of cash. Just be sure it fits the budget for your real estate investing business.
Tip #20: Know All About Tax Deductions
Becoming a landlord is one thing; becoming a savvy, successful landlord is another. Take advantage of all of the benefits of being a landlord- a major one being tax deductions. A lot of the time, a real estate investor can deduct mortgage interest, utility payments, maintenance, etc. Save money on your real estate investing business!
Related: Top Ten Traditional and Airbnb Rental Property Tax Deductions
Tip #21: Never Hesitate to Seek Help
Being a landlord is no easy task, whether you’re dealing with long term or Airbnb income properties. Even if you don’t opt for professional rental property management, you can still enlist the help of other professionals in the real estate investing business. Real estate lawyers, experienced landlords, and handymen are just a few of the people you may have to turn to when being a landlord.
These 21 tips for rental property owners will put you on the path to being a successful landlord with a prosperous real estate investing business. Take rental property management and the landlord-tenant relationship seriously, learn from your mistakes along the way, and know that being a landlord, while tasking work, will be worth it for the rental income!