Being
a Landlord
There are particular considerations
to be aware of if you're considering purchasing investment property
or renting out a property that you currently own. The following
information should help make the decision a little easier.
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If You're at the
Idea Stage
As we discussed in Part
1 of this Consumer Focus, a good real estate
agent can be immensely helpful in your search and purchase of
an investment property. Look for an agent who has experience
in helping people buy investment property. Agents with experience
in this specialized market will be able to find out about the
income the property currently generates and estimate expenses
for the upkeep of the property.
Also, remember that this is a
business
decision. Be careful not to get caught up in the
excitement of the moment during the property search. Don't let
emotion cloud
your judgment. Remember, although the property
may eventually or occasionally be your home, you're primarily
purchasing it for its income-generating potential.
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Finding
a Tenant
You may want to consider trying
to rent out the property yourself. If you're not sure what a
fair
market rent would be for your property, try looking
in the classified section of the local newspaper where the property
is located. It's probably best to never
rent to people you know. You may find yourself
in an uncomfortable situation if that friend or relative you
rented to has trouble coming up with the rent. Be sure to check
several of your applicant's previous references, not just the
current landlord. Your potential tenant may be a major headache
for the current property manager who may give a glowing reference,
hoping to have him or her move out. You should check the applicant's
credit
history, too.
If you don't want to do all the
work yourself, then you'll need to work with a property management
company. Several can be found in the business pages of your
telephone directory. For a fee, usually a percentage of the
rent, property management companies will do much of the leg
work for you, including the routine maintenance of the unit.
As you would with any potential contractor, be sure to contact
your local Better Business Bureau to ensure that you're working
with a reputable company.
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Upkeep
and Maintenance
Nearly every one of us have been
a tenant once in our lives. In your business
dealings with your tenants, try to remember how
it felt when your landlord let things go and let little repairs
go unattended. Remember that your tenants have lives, too, and
your rental property is their home. Treat them with same courtesy
you'd expect if you were the tenant.
Keep accurate
records, including any and all receipts related
to the upkeep of the property, mileage costs, insurance bills,
etc. You and your accountant will be glad you did during tax
time. Also, if you find that your property management expenses
may be higher than you originally anticipated when you have
a vacancy or the lease is up for negotiation, you may need to
adjust your rent upward. This documentation will be helpful
in deciding how much to increase the rent.
Finally,
be sure to keep up to date with
landlord-tenant
law. In most cases, these laws are locally enforced.
If you’re not sure about a situation, be sure to seek
out legal or other professional assistance.
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Other
Resources
This is just a brief overview.
For more information on investment property check
out these resources.
Websites*:
* Names of resources and organizations
included in this online article are provided as examples only,
and their inclusion does not mean that they are endorsed by
the Savvy Consumer Information Center or any Government
agency. Also, if a particular resource or organization is not
mentioned, this does not mean or imply that it is unsatisfactory.
*If you click
on these links, you are leaving our website. Please bookmark
us before you leave so you can return easily. We are not responsible
for the content of these websites.
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For
more information on other popular consumer issues check out
our Consumer
Focus Archive.
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