Property investment can be tricky business at times, and as an owner, there are certain landlord responsibilities you need to adhere to. Not only for your tenant, but also to protect yourself against potential costs and liabilities. Here are our top 10 tips for surviving as a landlord.
1. Seek financial advice
First things first: seek financial advice before entering into the property market. And not advice from your broke uncle who had a bad experience in real estate once, get professional advice. Knowledge is power, and the more you know about your financial situation, the better you’ll be able to manage your options.
2. Get landlord insurance
This is such a valuable and underrated factor to property investment. Landlord insurance covers you for financial loss under a number of circumstances. They range from water damage, tenants who can’t pay rent, tenants who abscond from the property, sudden death of a tenant, plus many more. The legalities of your landlord responsibilities can sometimes become costly; insure your property.
3. Know your rights
Tenancy laws in each state are similar but can sometimes vary. It’s important that you are familiar with your state’s regulations to ensure that you are well-informed, which will be particularly beneficial for conflict resolution.
4. Treat it like a business
Consider your investment property as a ‘bricks and mortar’ savings account, rather than as though someone else is living in your property. Don’t become too emotionally attached; an investment is a business matter and should be treated as such.
5. Ensure appropriate checks are carried out upon tenant application
Finding the right tenants for your property is just as crucial as finding the right property itself. You’re better off with a slightly longer vacancy than quickly approving a tenant who will abuse the property and cause headaches and financial loss.
6. Maintain a professional relationship with your tenant
You don’t have to become best buddies with your tenants, but a professional relationship is always a good idea. Good, two-way communication is the best way to build trust and establish a rapport with your tenants. These are the people who are paying you rent and taking care of your property – it’s in your best interests to make the effort with them.
7. Don’t overestimate rent rates
It’s important to keep your rental income expectations in line with the current property market. This includes not inflating the price drastically after carrying out renovations and improvements. You will be able to increase your price somewhat if the property needs a makeover, but don’t expect tenants to pay a significantly higher amount just because you spent big bucks on fixing it up. Also, lower rent prices are directly linked to lower vacancy rates, and there are tax benefits to negatively-gearing your property.
8. Understand your maintenance responsibilities and expenses
Your landlord responsibilities include carrying out maintenance and repairs in a timely manner. But what you may find surprising is just how quickly these expenses can add up. You need to have funds available to fix issues as they arise, otherwise you may end up in breach of your contract.
9. Have multiple funding sources
Having (or at least finding) extra funds can make all the difference the growth of your investment portfolio. Strategies such as joint equity ventures, private loans, hard-money loans, and bank financing are all options to consider as a landlord.
10. Hire a property manager
And finally, if you feel overwhelmed by all of the above, rest assured that a good property manager will be there to guide you through the process all the way. Property managers are knowledgeable and experienced. They can handle the issues you either don’t have time for or don’t have the required skills.
As a property investor, your landlord responsibilities include doing right by your tenant, but also making sure you are as educated and prepared as possible in order to build a successful property portfolio.