This blog is going to cover some tips to make being a landlord a great experience. Owning rental properties means dealing with tenants. Many investors either don’t like or don’t want to deal with tenant and property issues, so they will hire a professional property management company. But if you decide to self-manage, here are some things you should understand.
First, remember asset protection. Title to your rental should be held in a well-designed, protective LLC. Not all LLCs are created the same! What you get online is not sufficient. It should be created by a competent asset protection attorney. This will protect you and your personal assets from tenant slip-and-fall lawsuits.
Second, have really good lease agreements. There are numerous free forms available. So I would recommend getting at least 3 or 4 options and read through them. See what clauses are in them and which are important to you. If you need to amend or revise one, you should work with an attorney to draft it as you may accidently do something that might hurt you.
Third, make sure you have the appropriate liability insurance. This is the one you get from your insurance agent and not the title company. It is a “landlord’s” policy, which is different than an owner-occupied policy. Make sure you understand the terms, limits and exclusions. I also recommend an umbrella policy. This is an “add on” to your main policy that adds dollar amount coverage. You can get a million dollar umbrella policy very inexpensively.
Fourth, remember that landlord-tenant law is VERY state specific. That means something you heard at a national real estate event, online forums or investors from other states may not be applicable to you. There are states that are very landlord friendly and others that are very tenant friendly. The laws can be very different!
Fifth, leave your emotions out! Don’t get suckered into sob stories when tenants can’t make rent or need other concessions. While it may be true, it’s also common for tenants to lie. There are professional renters who know how to take advantage of landlords. Make all decisions on a professional level. If you give an inch, expect to lose a mile.
Sixth, be prepared for evictions. Hopefully you won’t have to, but have a good eviction attorney in your rolodex. While you can conduct your own eviction, I really don’t recommend it. It’s not expensive to hire an attorney. And if you don’t know the exact process, you’ll end up wasting time and losing more money in lost rent. It can also get ugly! Tenants don’t like being evicted and you don’t want to put yourself in a risky position.
Lastly, screen your tenant! I am always surprised by how many investors don’t really conduct a good screening on their tenants. They are living (and possibly destroying) a very expensive asset. Take the time to get a good tenant. At the very least, you should check backgrounds, credit, employment, previous landlords, criminal & bankruptcy court records. And you may have to verify that references are really who they say they are. I’ve known tenants to provide the name of their friends as employers or previous landlords.
Over time, you’ll also learn little tips and tricks that make landlording easier. But don’t forget, hiring a professional will definitely save you time and headaches, and possibly money, too.
Jeffrey S. Breglio, Esq.
Breglio Law Office and REI Mastery U
www.reimasteryu.com
jeff@bregliolaw.com
(801) 560-2180