Taking on your first property as a landlord is an exciting time, but it also comes with a number of anxieties associated with doing a good job as a new business owner. Thankfully, there are some generally accepted practices for first-time landlords to help ensure your rental business not only gets off to a great start but continues to generate income for you over the course of decades.
The following are five tips for first-time landlords, courtesy of the experts at Insurance by Castle:
#1 Pay Attention to Credit Scores
Many first-time landlords get antsy to put residents into their building, and in that pursuit, they sometimes fail to give credit scores the consideration they need. The only way to generate a steady income from your rental is to ensure that the people occupying the space are reliable when paying their rent. For the most part, anybody with a credit score over 700 is ideal, and residents with credit scores below 600 probably are not going to be as consistently reliable. Check previous rent references if you can, but always aim for residents with higher credit scores.
#2 Rent is Everything
Having a tenant that can’t reliably pay rent works against the entire point of running a rental business, so it is so important to make rent your first priority as a landlord. If there are tenants who genuinely need help, try to communicate with them to see what can be done, but if there are residents who aren’t paying and are ignoring your attempts to contact them, it’s time to initiate eviction. Also, consider online bill payment options to make rent easier to submit.
#3 Understand Fair Housing Laws
Not all property investors completely understand fair housing laws, and that is a mistake because there can be serious repercussions for those that don’t follow them. Ignorance is no excuse for breaking the law, so make sure you’re up-to-date on fair housing laws when renting out your property.
#4 Renovations Should Generate More Income
You want your rental property to put its best foot forward at all times, and you also want your residents to be happy, but it is important to weigh the costs and rewards of any renovation project before undertaking it. In a general sense, only make the renovations that are going to generate more income for your property. If they help you charge higher rent and justify the higher expense, they are worth doing. Otherwise, exercise restraint.
#5 Invest in Landlord Insurance
There are a lot of things that can go wrong with a rental property, just like there are a lot of things that can go wrong with a home. Landlord insurance, which covers the loss of property to storms and fire while also providing liability coverage should anyone end up injured in one of your rentals, is the type of protection new landlords need to ensure they don’t go bankrupt through bad luck long before their unit has had the chance to generate the income they imagined when undertaking the business opportunity.
If you have any questions about landlord insurance, contact Insurance by Castle and we’ll be happy to play our small part in helping your rental business get off to a great start!