Five Tips To Consider Before Becoming A Landlord

Consider this: you and your wife are looking forward to starting a family, but your one bedroom condo isn’t going to cut it. So, what are your options? You can either sell or rent. Though selling your property seems like the best option, renting out your condo may be even better. Why? It’s an investment and a good way to make a little more so that you can save a little more.

However, there are a few things you should consider before becoming a landlord.

1. Laws. Every state has different laws and regulations about renting out property. Familiarize yourself with the laws that pertain to you. This isn’t only in a renter’s best interest but the landlords, as well. The laws help to ensure that no one is at risk when renting a dwelling.

2. Background checks. Even if your best friend knows someone who would be a great renter or a potential renter sounds perfect after having a conversation, you should always protect yourself and your investment. Get background checks. Some people can tell a good tale, but at the end of the day, they are really just a dirty sneaker with some polish. Background checks eliminate the good story tellers from the great renters.

3. Work work work. Though you may make and save a little money, being a landlord can be time consuming. You may have frequent calls to fix things or complaints about neighbors or the apartment itself. In essence, being a landlord is a full time job.

4. Ground rules. In addition to researching state laws, one of the best things you can do is create your own list of ground rules. For instance, no pets. If you’ve just redone all of the hard wood, replaced old blinds with new ones or added fresh paint, it may not be in your best interest, or the renters, to have pets. In the end, they can cause a lot of damage. However, say you found the perfect renter, but they have two cats. Another option would be to charge a pet deposit and/or monthly pet rent. This helps alleviate some of the potential damage, and costs, of renting to a pet owner.

5. Insurance. Though you may require your renters to have insurance, it’s also a good idea to continue to insure the dwelling yourself. The last thing you want is the building to burn down because of a hot tea kettle that didn’t turn off or the renter being maimed while living in the residence and suing you. Maintaining your own renters insurance is smart business planning and helps ensure your investment remains an investment and doesn’t become a lingering debt.

Whatever you decide, there are options. If you’re not quite ready to sell your condo, consider renting it out and becoming a landlord. It doesn’t have to be forever and you can still sell it whenever you feel that the burden becomes greater than the reward, but do your research and consider the pros and cons.