Becoming a Landlord

Ever thought about investing in real estate? Want to own property that makes you money each month? Becoming a landlord may not seem like a dream for many, but it is for some. Those that do think about it know that real estate equates to wealth. Here are some things you should know about becoming a landlord.

Know Fair Housing Laws

Landlords have a lot of discretion in approving and denying potential renters based on rental history, credit rating, and criminal history, but it is of utmost importance that you understand Fair Housing Laws. Knowledge of the laws helps you establish yourself as a reputable landlord, but you must know that you are not only responsible for knowing the law, but you are required to follow Fair Housing Laws. You cannot take into consideration a rental applicant's mental or physical disability, familial status, marital status, age, sex, national origin, creed, color, or race. If you have questions about Fair Housing Laws you should contact an attorney.

Know-How to Screen Applicants

You will want to screen any potential applicants before handing over the keys to your property. You will want to make sure your applicants provide proof of employment, income, credit report, criminal background check, and references from previous landlords or employers. You can use a reputable screening service to help assist you if this is not something you are comfortable with handling yourself. Having all this information upfront will assist you with making the best decision.

Establish a Pet Policy

Most rentals do not allow for pets unless they are screened prior to accepting an application and writing up a lease agreement. You can get a pet screening tool to help assist, but you will want to think about starting with a pet policy. You may want to limit the number of pets, the type of pets, and even the size of pets that a renter can have on your property. You may also want to charge extra monthly for pets to assist with the maintenance that may incur due to pets being in the home. In addition to this monthly pet fee, you may require a pet deposit to supplement the standard security deposit. Regardless of your pet policy, Fair Housing Law requires you to accept service animals.

Budget for Unexpected Costs

Prior to even purchasing a property, you may want to take into account budgeting for unexpected costs that arise with owning a home, preparing for missed rental payments, or times when the property will be vacant. Additionally, you will want to account for landlord insurance for accidents, maintenance, and repair costs, rental licensing, inspections, taxes such as property and rental tax, income tax, utilities when the property is vacant, marketing and advertising fees, service fees for screening applicants, and potential legal fees.

Require Renters Insurance

Protecting your property is something that should always be on your mind. You really should think about requiring renters to have rental insurance. In fact, you can require that they provide proof of rental insurance, paid in full for the entire length of the lease, upfront. This will ensure you that the renter has continual coverage while in your home.

Have a Written Rental Agreement

A written rental agreement is a contract. This allows you to best communicate your expectations and protect yourself in legal situations. Although oral agreements are legal it is less effective than a written document where both parties have signed. You will want to make sure that all rules and clauses adhere to state-specific laws. You will want to thoroughly outline the following items:

• Identify both Parties

• Identify the rental address

• The term of tenancy and how it ends

• Eviction policy

• Monthly Rent, Rent Due Date, and Security Deposit

• Late Fees or other Fees

• Payment Method

• What is included in the rent? (utilities, if any, appliances)

• Include Tenant Responsibilities (utilities, lawn care maintenance, etc.)

• Landlord Responsibilities

• Pets

• Tenant Insurance

• Each occupant's name and the number of occupants

• Landlord's access to the property for repairs, maintenance, and inspections

• Rules of tenancy (no smoking, pets, parking, storage, etc.)

• Damage of property

• Signatures

As always, you should seek legal advice when drafting any legal document such as a rental agreement.

These are just a few of the things to consider when thinking of investing in rental properties.