by Ben Luxon June 28, 2019 5 min read

1) The Legal Rules

Being a landlord isn’t quite as simple as letting someone stay in your spare room or above your garage. Renting out a property or even just a room comes with its own sets of rules and laws that you need to be familiar with.

Here are a few legal concerns you will want to consider:

  • Providing a Safe Environment: Laws vary from state to state. But often landlords are legally required to take reasonable measures to ensure the safety of tenants from criminals and other tenants.
  • Making Repairs Promptly: For most repairs and major maintenance work it is the landlords responsibility. Repairs should be undertaken and completed swiftly. If you fail to do so the tenant may report the violation to a state building inspector or put their money in escrow.
  • Understand your Tenants Privacy Rights: A landlord can’t just enter a tenants rental property. The landlord needs to give a written or verbal notice at least 24 hours beforehand.
  • Collecting the Bond: First you should be aware of the maximum amount you can collect for a bond. This varies from state to state. Some states, like Texas and Illinois, have no limit.

How and where you need to store the bond again varies depending on the region you are in. Some states do not have any rules about where you must store the security deposit. Other states require you to put security deposits in a separate interest bearing account.

Certain states will also require you to give the tenant a security deposit receipt within 30 days of move-in. This receipt must show the bank where their deposit is being held and the annual interest rate.

There are several other legal traps that landlords often fall into. Be sure to perform thorough research when finding out what is legal and what isn't.

Related: How Does the Eviction Process Work

2) Comprehensive Screening Process

Screening your tenants is a vital part of being a landlord. Ensuring you only rent to good tenants will help secure your property’s income as well as help protect it against unnecessary wear and tear.

Related: How to Screen tenants like a boss.

Your number one concern when you are screening prospective tenants is to determine whether they can and will pay rent on time and in full every month.

Here are a few things to consider when screening tenants:

  • Personal References: It's always worth getting a couple of personal references for your prospective tenants. This allows you to determine the kind of person they are from somebody else's perspective. 
  • Financial Information: You need to determine that the tenant is able to pay the required rent. If their income only just covers the rent, then they may struggle to pay sometimes. You should make sure the tenants income is steady and at least twice the rent.
  • Work History: Determining if they can pay the rent is, as we just talked about, pretty essential. Another thing to check to better understand the financial past and prospective monetary future of the tenant is their work history. Someone that flits between jobs may not have the most reliable and stable income stream..
  • Contact Information for Previous Landlords: Have a word with their last two landlords. Ask them a few questions to determine if the tenant was respectful and paid on time. The key question to ask is; would you rent to them again?
  • Lifestyle Information: You want to know if they are party animals certainly, but at a more base level you should ask how many people they plan to move in, whether or not they have any pets, or if any of them are smokers.

If for any reason you are a little uncertain about the prospective tenant, you can always get someone to co-sign the lease to ensure payment.

to know before you become a landlord

3) Budget for Unexpected Repairs

Owning a property comes with a whole host of expenses. When something breaks - depending on the severity of the issue, you may need to get a repairman out to fix the problem. This will probably be expensive.

Related: 4 Maintenance Issues Tenants are Responsible for

Normally, the things that break are pretty easy to fix but every now and again a big expense will crop up. The chimney needs repointing or a pipe has cracked in the dead of winter under the house and needs replacing. These things can’t be avoided, they are natural parts of a properties life-cycle. This doesn't mean that fixing them isn’t going to cost you a pretty penny.

Having a budget set aside to cover these unexpected costs will mean you don’t have to worry about scraping together enough money for the fix, and you can get it done quickly to a high quality.

4) Non-traditional Hours

Being a landlord isn’t a 9 - 5 kind of job. There are no set hours. Some days may be a breeze, whilst others are immensely stressful and busy.

Emergencies can happen at any hour, and you’ve got to be prepared to handle them.

Plus, scheduling can become pretty difficult. When it rains it pours, so they say, and this saying is as true for landlords as anything else. For example, you go to one of your routine inspections, you notice that the gutters need a clean, and then the tenant starts pointing out things that need fixing.

What should have been a quick once over, turns into weeks of expense, organising and paying for repairs.

Being a landlord requires some excellent time management skills.

One thing you can do is to set 'office hours'. The tenant can contact you outside of those hours only in an emergency. This will help you manage your time and stop you from spending your evenings on the phone or worrying about uyour rental properties.

RelatedThe Travelling Landlord: What we Learnt from Managing Properties Abroad

to know before you become a landlord

5) Inspections

Property inspections are one of the main ways you can safeguard your investment against bad tenants.

It is important that you keep track of the condition of your property and make a note of any maintenance issues or tenant damage that has occurred since the initial inspection in the property condition report.

Sticking to the guidelines set out for rent inspections by the governing bodies is also integral to reduce the risk of costly disputes or penalties. 

An unconventional but rewarding role

A landlord’s life can be stressful. It can require you to work at all hours and when things go wrong dealing with them can be costly and time consuming. However, it can also bring with it the reward of personal freedom that comes with being your own boss.

On top of this, a lot of people get on well with their tenants and find themselves building personal relationships with them which can be rewarding in it’s own way.

 

We hope you found this blog interesting! However, do note that it should not be used as a substitute for competent legal and/or other advice from a licensed professional.

Ben Luxon

"Ben is a co-founder, author and real estate enthusiast. His interest in all things entrepreneurial has led him to work with real estate professionals all over the world, distilling their knowledge into articles and Ebooks. His love of travelling has taken him to over 10 countries in the last year, where he has sampled the craft beer of them all."


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