Rental property is a very profitable business when handled with care. You will need to protect your property to be able to make the envisaged profits. There are myriad ways to lose money so your property can be protected in the following ways.
1. Liability insurance and tax payment
The rental property should be protected against certain unforeseen circumstances such as fire floods etc. Much insurances offer limited insurances. Ensure you have the right insurance by discussing with a broker. Your insurance cover should be worth the value of your property. Insurance should also cover tenants in case they get injured by your property.
2. Written rental agreement
Prepare a rental contract to be signed by your tenants. The contract should indicate the cost of rents per month, the amount to be deposited as caution and its duration. Always issue a receipt upon reception of money. Detailed rental agreement will ease understanding.
3. Provide an inspection list for tenants to sign
Make a list of all the things in the house and let the tenant tick against each of them. If possible take a picture to serve as proof of the state of your house before a tenant sets in. This could be used in case of any misunderstanding.
4. Security deposit
This deposit is considered as caution intended to be used in case the tenant destroys anything in the house and does not repair it. It can also be considered as security funds in case the tenant leaves abruptly without prior notice respecting the time interval as indicated in the rental agreement.
5. Complete a rental application
Immediately your house is put on rents, establish a rental application to be filled by interested tenants. Basic information should include their names, address, which apartment they are interested in and the source of revenue that will be used as rents, the intended date to move in and their duration of stay. Take a very short time to provide a reply to their application.
6. Respond to tenants’ complaints
Tenants will complaint when things are not right and you as landlord should respond to their complaints in a genuine and timely manner. Listen attentively to their complaints and react promptly. Let not their complaints lead to conflicts. Make available time within working hours when your tenants can contact you.
7. Make the environment secured and safe
Make your house free from all hazards like pending cables, injuries, risks of falling thereby making sure it is good for habitation. Study all circumstances of a hazardous situation. Inform tenants of such when noticed to take appropriate precaution until it is repaired. Repair works should not be prolonged. Provide an excellent lighting system from apartment complexes to front and back doors, sidewalks and parking lots. Draw up a Health and Safety Policy and make sure your tenants understand it. The safety measures taken must respect the State and City Housing Codes.
8. Master the legislation binding legal property
Read and understand the local legislation pertaining to rental property (Land lord and Tenant law for example). Although a verbal agreement is still acceptable by law, it is good to have a written document.
9. Set aside funds for caution, repairs or maintenance
Proper management skills and discipline will guide you in money management< Set aside funds for caution separately. Money must be readily available to refund the tenants when they leave your home. Repairs and maintenance works should not be delayed for lack of fiancés. Organize yourself such that one you receive money from tenants set aside a percentage for maintenance. After a tenant leaves make sure you arrange everything before you let in another and if possible repaint the apartment.
Your rental property will obviously last longer than you will live. It is appropriate to make a plan. If you have children you may have to let them know how the property will be managed and how each one of them could benefit from it. No one will invest the property and die along with it, you may decide to give it for charity, whatever your plan is, it should be written. You can also make your property a business entity such as LLC or a corporation. Each business property can be a separate business entity. This shields your personal assets against law suits.
Rental business is rewarding but just like any other investment, it has some risks associated to it. It is therefore imperative to learn and manage properly the risks associated with it.