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10 Things Never To Forget For Landlording Success
Success in real estate and landlording is not a science.
Even with all the knowledge that is readily available contributed by experienced property investors, anyone can still fail at real estate.
However, taking the advice of seasoned professionals seriously can improve your chances of success.
Here are some big tips that could help you avoid pitfalls in the game.
1) Always use a rental application form
People who are new to landlording often make the mistake of foregoing the rental application form when evaluating tenants.
Many even accept the first interested tenant out of excitement!
But you don’t need to be in this business for very long to realize that a lot of funny stuff can happen with tenants.
Some deal with drugs, some are a prick to neighbors, and some cause so much damage to property that effectively puts you into the red.
You will have a much better chance of recovering any money owed when the initial application form includes accurate personal information about the tenant such as social security number, date of birth, references, etc.
2) Inspect the place before a tenant moves in
Conduct a thorough inspection of the house and document any damages or defects that are present.
Then get the tenants to verify them, then endorse it.
This is critically important as whenever there are damages found on the property, you can bet that a tenant would insist that the damages were already there when he first moved in.
Without proper documentation of the condition of the dwelling originally can give tenants the impetus to lie since you have no proof.
Even if you are sure the security deposit is enough to cover any repairs needed, you won’t be able to draw on that money because you have no proof.
You might also want to conduct an inspection personally even if you have hired a property manager.
You might feel that if you need to conduct an inspection yourself before someone moves in, then what’s the point of hiring a property manager.
The thing is that managers can sometimes become complacent due to their years of experience.
Don’t expect them to treat your property as if it’s their own.
3) Property inspection during tenancy
While the best case scenario is that you never have to step foot into the property until a tenant decides not to renew the lease, doing so is not a good idea.
Property can be damaged during the course of the tenancy. And it is best to identify these things as soon as they happen.
Firstly, so that you can warn the tenants of their bad behavior and put a stop to it.
Secondly, you might have to evict them before things get much worse.
The costs to repair damages to a house can easily outstrip the monthly rental.
4) Document any money changing hands
Most of the time, you will be the party receiving money (from the tenant).
In odd situations, the tenants would be the receiver.
Whatever the case, always document the exchange of monies because money is always a sensitive issue subject to conflicts and challenges.
The date is a key detail that ca be especially important.
Sometimes, tenants can make partial rental payments for overdue rent. This also must be documented and signed as it can play a crucial role if you decide to pursue an eviction action later.
5) Be updated with local legislation
While the law can sometimes be favorable to landlords, remember that tenants have the protection of the law as well to guard their interests.
New landlords often violate local, state, and federal laws without knowing… thinking that a lack of knowledge exonerates them from any wrong-doing.
That cannot be further from the truth.
You are responsible for keeping in line with legislation when dealing with business operations.
Make it a point to keep updated with legal matters. Obtain advice from real estate attorneys when need be.
6) Hire an attorney when required
Real estate investors are notorious for saving costs.
But when there comes a time to hire a lawyer, it is not time to save some money on these expenses.
If you don’t already know, many businesses fold from losing just 1 lawsuit filed by customers.
While you might feel that you have well-versed and familiar with the property laws governing your area, hiring a proper attorney can give you more peace of mind when court action is on the horizon.
7) Keep in touch with the market
Since you have stepped into the business of landlording, you have to start walking the walk.
Keep track of home prices and rental rates in the area.
Have a feel of where the market is moving and identify trends that are emerging.
This enables you to identify new opportunities. And also tells you whether you are charging too low a rent.
8) Get the forwarding address of tenants
Once a tenant decides not to renew the lease and vacate the property, you need to obtain the forwarding address.
This is so that you can send information and also forward any mails that continue to come in.
You will also have a lead should you need to pursue the former tenant for money due or other reasons.
9) Security deposit reconciliation statement
One of the enigma of real estating is the security deposit.
Many landlords still don’t fully understand what it is!
Do note that in many states, landlords can be penalized for treating the security deposit like their own money.
There is a need to account for all the dollars and cents that make up the security deposit.
This is even when you feel fully justified that you can keep all of it.
10) Don’t give the property manager a free hand
The key advantage of hiring a property manager is so that you can leave all the work to him.
But doing so can be landlording suicide.
You can trust your manager 100% that he is protecting your interest all the time.
Keep in touch and get updated on happenings on the property.
This is so that when there is a need for your direct involvement, you can act immediately. Otherwise, sometimes it can be too late to prevent a catastrophe.