3 essential tips for first time landlords
Thinking about becoming a landlord for the first time? You're not alone. Post COVID-era has a lot of landlords embarking on the journey of property ownership. We have a saying at GNPM - Everyone wants to own real estate, but nobody wants to deal with headaches.
To help you avoid those headaches, we've compiled three essential tips for first-time landlords.
1. Screen your prospective tenants, THOROUGHLY.
One of the most important steps in successful property management is selecting the right tenants. A thorough screening process can help you identify trustworthy individuals who will treat your property like it's theirs and pay rent reliably and on time.
Here are 3 components of an effective tenant screening process:
- Rental Application: Require prospective tenants to complete a detailed rental application that includes information such as employment history, income verification, rental history, and references.
- Credit and Background Checks: Conduct credit checks to assess the applicant's financial responsibility and background checks to evaluate any past rental-related issues or criminal history.
- Income Verification: Ensure that potential tenants have a steady source of income that is sufficient to cover the rent. A 3x income to rent ratio is a healthy threshold to aim for.
By investing time and effort into screening your tenants thoroughly, you can minimize the risk of rental income loss and property damage caused by irresponsible renters.
2. Get your lease right, the first time.
Landlords often don't realize how important an effective lease agreement is until it's too late. In the case that something goes south at your rental property, the lease is what everyone will refer to. If the lease doesn't contain comprehensive & reliable stipulations, you leave yourself and your tenant liable.
Avoid trouble down the line by getting your lease right the first time. 3 items to consider:
- Do you have a TREC lease in place? A lot of landlords try to use online templates for leases which are NOT promulgated by the Texas Real Estate Commission. What does that mean for you? Using a non-TREC approved lease, once again, leaves you open to potential liability issues. TREC leases can only be drafted by licensed real estate agents. Find a property management company that can help you.
- Have you filled in the lease with the correct stipulations? Move-in policies, move-out policies, late rent stipulations, security deposit agreement etc. These are all commonly disputed items and having them in the lease from Day 1 makes everything clear to everyone.
- Are you getting the lease signed using a professional software? For ex: DocuSign has a page at the end of contract that timestamps exactly who signed the lease at what day/time. Using software like DocuSign helps you look professional to your tenants & also is yet another step to a more secure lease.
It's also essential to comply with local landlord-tenant laws and regulations when drafting your lease agreement to ensure its enforceability.
A well-crafted lease agreement is the source of truth of a successful landlord-tenant relationship. Get it right, the first time.
3. Communicate professionally & promptly.
Two words to remember: positive & professional. These are healthy pillars to follow when communicating with your tenants. Regardless of the situation, leaning on staying positive & maintaining professionalism no matter how bad the situation is incredibly important.
We have seen too many landlords engage in heated discussions with tenants without actually constructively solving the matter at hand. It's not personal and so don't make it personal.
Additionally, try to have everything in writing. Focus on being concise & purposeful in your writing at all times. If you need to have a phone call, that's great and yet, follow-up the phone call with a text message summarizing everything you spoke about. This allows for maximum transparency & protects you in the case of a dispute.
Lastly, be quick in your communication. When you need something from your tenant, you're going to expect it to be delivered promptly. The same applies to you. If you tenant requests something, even if it will take you a while to solve it, receipt their message. Simply receipting their request goes a long way in establishing a healthy relationship.
Thanks for reading, hope this was helpful. Talk soon!
