Introduction
Whether you’re renting your house out or buying/flipping an investment property, getting started in the real estate business is no easy task. There are many considerations to keep in mind, and renting out house tasks like scheduling inspections, screening tenants, and navigating state guidelines can be complex to grasp. Below is a step-by-step guide for first time landlords to make the process slightly easier.
Step 1: Get Your Property Inspected
To ensure your property is suitable for incoming tenants, you must meet health, safety, and building codes. Maintaining a habitable property means that you frequently ensure the following components are in good shape:
- Safe electrical wiring
- Stable foundation and building infrastructure
- No pest infestations
- No mold or other environmental hazards
- Working smoke and carbon monoxide detectors
- All essential services such as running water and proper plumbing
You will also have to consult a professional to inspect the following systems:
- Electric
- Gas
- Hot water heating
- Infrastructure like ceilings, roof, walls, etc.
- Plumbing
Although inspections can be costly, not inspecting these systems could result in extensive repairs and replacements that will inconvenience you and your tenants. Not to mention, large-scale failures of essential systems could make you liable if your tenants are endangered as a result. Dealing with the cost up-front is always better than managing unexpected disasters in the future.
Step 2: Contract out Repairs and Cleaning
After you have had inspections carried out on your property, arrange for any necessary repairs by a trusted contractor. It’s important that you hire someone who is an expert in these matters, since a faulty repair that you take on yourself or hand off to an amateur could cause more harm than good.
In addition to anything that the inspector noted, many homes will need the following tasks taken care of before tenants arrive:
- New appliances
- Sewer line blockage removal
- Water damage treatment
- Pest removal/prevention services
Many properties will also need a deep cleaning before renters can move in. It’s best to hire a professional cleaning company to handle this task, since they’re equipped with the knowledge and tools that can make the process much easier and more thorough.
Step 3: Check Local and State Regulations
Double check that the zoning requirements of your land allow you to use the property for residential leasing, especially if it has not been used for that purpose prior.
Your state rental laws will also have a large impact on what you can and cannot do as a landlord. Laws regarding rent increases, late fees, entry rules, fair housing laws, and tenant screening will tell you how your state dictates you can conduct rental business. Not abiding by these laws could result in serious legal and financial repercussions, so make sure that you pay attention to them and check with an attorney or another trusted landlord if you have questions.
Step 4: Create Your Lease Agreement
A strong rental agreement is the foundation of a good tenant/landlord relationship. Having airtight policies that your tenants are aware of and agree to makes it easier to enforce them and evict tenants who do not abide by the lease terms. Also, a written lease gives tenants a way to look back at and reference the document when they need to be reminded of your guidelines.
Leases are complex, and they contain many potentially confusing terms and requirements. It’s best to find a template for your state and modify it to fit your personal needs. You can also consult a lawyer if you want a second opinion on your document.
Step 5: Research Property Management Software
Property management software is an invaluable tool for landlords. Certain software companies, like Innago, offer free services that will help you screen tenants, collect rent and security deposits, manage maintenance requests, send out reminders, and much more.
Especially when you’re first starting out, all the required tasks, paperwork, and potential tenant issues can feel overwhelming. When you have quality property management software, many of the tedious day-to-day tasks are taken care of, freeing up time for you to work on the more meaningful tasks that will better your business.
Conclusion
Real estate investment doesn’t have to have an impossibly steep learning curve. Of course, as with anything, you will make mistakes and learn from trial and error. However, with this step-by-step guide, hopefully your first property investment will be made much easier and pain-free. Use it as a checklist for landlords who may want more guidance or information when beginning the journey of real estate investment.