Becoming a property-owner for the first time can be a bit intimidating. It may be by chance and you want it to be fruitful. Or, you might have bought your first investment property to get secondary income. In either case, being a property owner is a brilliant method to increase your earning, given you are ready to work hard.
Most property owners start as private owners having a single unit. Nevertheless, becoming a prosperous property owner includes finding a renter as well as collecting monthly rent. You also have to take care of the legal responsibilities, checking prospective renters, resolving disputes, and re rent any empty unit.
Unluckily, a lot of first-time property owners commit serious mistakes while renting out their first properties. This can be giving the unit to a bad renter, not being able to take care of maintenance needs, or doing blunders in the eviction process of a negligent renter. Following are the five tips that will help you evade those kinds of mistakes and make your first “rent by owner” unit a success.
What is meant by rent by owner?
Rent by owner is a regular term that refers to a private person who is a property owner usually having less than three properties. When units are marketed as “rent by private owner,” it means that the renter will deal directly with the landlord and not a dealer or the real estate agency.
There are benefits of advertising your property as a house for rent by owner. One key benefit is that a lot of tenants are keen to search for such properties, and using this term will increase the chances of your unit appearing in the search results. It can also be helpful in making your ad stand out as compared to others for tenants, as some renters like to have a closer contact with the property owner rather than dealing with an agency or broker organization.
Just being a rent by owner property owner is not always sufficient to make you stand out. A private owner renting their unit might also want to give services that are not offered by other property owners. This can be helpful in increasing the likelihood of success. For example, you can allow online payments; have maintenance staff available 24/7, and offer redesigning services. Other methods with the help of which you can succeed in renting out your first unit are:
1. Consider your property owner role as a rental business
You must know that you are in the business of renting out units as a private owner. You have legal responsibilities and business relationship responsibilities towards your tenants. For example, it’s fine to agree to a payment plan with a tenant who is unable to pay, but do make and follow rules for late payments.
If the renter has not paid rent on time, you may have to expel them from the unit. You can also be in contact with accountants, insurance companies, and lawyers for difficult situations. There is no need for a property manager for one unit. You should learn how to manage a unit effectively including finding the right renters.
To find good tenants, you have to:
Have a comprehensive tenant checking process
Do background checks on potential renters
Get references from former landlords
Check service records
Include rules regarding payments methods, pets, maintenance, late payments, and cleaning
2. Take appropriate care of the rental unit
For being a successful property owner you have to take care of the unit. Furthermore, you should ensure following the laws related to renter’s rights. These comprise of maintaining your unit, keeping a security deposit, keeping the property inhabitable, providing a quiet atmosphere. Be aware of federal and state laws for rental units. Furthermore, you need to make sure that the tenants are satisfied.
Maintaining the rental unit
Have a fast dispute resolution
Respect the privacy of your tenant
Offering facilities for a pet
3. Agree on a rent collection method
If you offer online payment for rent, it will help in collecting the rent on time. It is preferable to avoid checks or cash as they can pose several problems. For example, checks can get delayed in the mail or get lost, also they can take a long processing time. Furthermore, cash payment for rent doesn’t have a dependable paper trail.
As a result, savvy landlords use reliable and secure rent payment apps. Most rent collection apps have features that are useful for landlords, for example, the option to divide rent between roomies, process applications for renting, or flexible payment of rent. Methods like Zelle, PayPal, or Venmo are satisfactory for online payments, but not perfect for landlords. For example, they allow partial payments; this could get in the way of evicting a bad tenant.
4. Maintaining your rental unit
It is very important to keep your rental property well-maintained. But it is not easy, as the safety standards for a rental unit are sterner. For example, there can be guidelines by state on smoke detectors. You also need to provide hot water, garbage collection, and heating. Furthermore, you need to take care of health and safety hazards like no lead-based paint in the unit. You also need to make sure that your tenant is satisfied with the overall condition of your property.
To become a successful property owner, you need to provide quick repairs even for minor issues. You also need to do regular checkups of the unit, to confirm your renter’s safety and to avoid costly repairs. In order to make the most of your rental business:
Allow pets and ask for a pet deposit.
Do a market research to evaluate your unit’s rent.
Build a brilliant reputation to decrease the time in which the unit is empty.
Consider providing rentals for a short time.
Run a background check on tenants.
5. Acquire landlord’s insurance and ask for renters insurance
Landlord insurance is a must for “home for rent by private owner”. This keeps you from heavy unit repair bills and legal charges if the property is damaged. The insurance also covers the cost of transitory lodging if your renter can’t live in the building when repairs are taking place. Asking your tenants to get renters insurance in the rental agreement also proves fruitful. This guards a renter’s belongings in case of a flood, break-in, or a fire. It also protects you from charges if an injury occurs to someone in the unit.
Irrespective of your rental property being used for additional earnings or as your primary source of earning, it is important to appropriately manage your rental business. Before your first renter occupies the unit, it is vital to collect the rent for first month, sign the lease contract, Get the security deposit, and conduct an inspection of the unit with the prospective tenant. This way, your rental property business can flourish even if you have just a single property.