Becoming a landlord can be a profitable venture, but it comes with responsibilities that many new property owners underestimate. Understanding the basics of property management sets you up for success.
Tenant screening is your first line of defense against problems. Always run credit checks, verify employment and income, and contact previous landlords. A thorough screening process significantly reduces the risk of late payments, property damage, and evictions.
A well-written lease agreement protects both you and your tenants. Cover all important topics including rent amount and due date, security deposit terms, maintenance responsibilities, pet policies, and grounds for eviction. Consider having an attorney review your lease.
Responsive maintenance is one of the best ways to retain good tenants. Address repair requests promptly and conduct regular property inspections. Preventive maintenance is always cheaper than emergency repairs.
Keep detailed financial records from day one. Track all income and expenses, maintain receipts for repairs and improvements, and set aside funds for vacancies and major repairs. Good records also simplify tax preparation.
Understand fair housing laws. Discrimination based on race, color, religion, sex, national origin, familial status, or disability is illegal under the Fair Housing Act. Violations can result in serious legal consequences.
Consider whether self-management or hiring a property management company makes more sense for your situation. Property managers typically charge 8 to 12 percent of monthly rent but handle all day-to-day operations.