Being a landlord is not always easy. From finding tenants, advertising the property, conducting thorough screening, creating and following the rental agreement, move-ins and move-outs and much more. While it is often perceived to be easy on the surface, a lot actually goes into it making rental property profitable and running smoothly. Treating your investment property like a business is a must. Here are 5 reasons why:
1. It can be an emotional rollercoaster.
It's imperative that you keep your emotions out and clear-thinking in. Even if managing your rental property is not your primary job, it is a stream of income. When people get involved, especially when money and contracts are in the mix, emotions can get high. Keeping a clear head and leaving the emotions out will help you find real resolve and understanding of any situation you might find yourself in.
2. Everyone has an attorney – and they aren’t afraid to use them if things head South.
Many DIY landlords don’t even know the very basics of Landlord Tenant Law, but rest assured that Tenant’s certainly know their rights! In order to conduct fair and honest business, compliance with federal, state and local laws is a must. You may not agree with every law that’s on the books, but following the rules will keep you out of trouble and will present a standard to your tenants that you’re a professional and in control. Learn, stay up-to-date and comply!
3. It’s risky business!
You must always have a risk vs. reward eye when looking at your investment property. Exposed wires, tripping hazards, leaky roofs and broken window glass are just a few items that come to mind when considering risk. Providing a safe environment for your tenants to live in can be way cheaper than the liability that an unsafe home could place on you. Take care of the exposed electrical, remedy the tripping hazards, fix that leaky roof and replace the broken glass to avoid premises liability claims that could cost thousands if neglected.
4. Insurance, insurance, insurance.
Did you know that there is a difference between homeowner’s insurance and landlord insurance? Landlord insurance is designed to protect against mishaps at a property that is tenant occupied. A homeowner’s policy on the other hand, typically only covers the property if the homeowner is living in the property. Another great policy to consider is Tenant Liability Insurance. This is a policy that would cover tenant negligence, and in most cases, would avoid the need to involve a landlord policy. An example here would be if the tenant flushes an object down the toilet and the home floods. Because tenant negligence occurred, the damage caused would fall on the tenant to remediate the damage. This relieves both the tenant and the landlord, as neither party will have to come out of pocket for the damages. This type of coverage is very affordable, and in most cases is the tenant’s responsibility to carry.
5. Timing of maintenance can result in serious consequences.
We all know that sooner or later, items in our homes wear out and become inoperable. Being prepared for when that happens is the key. As with any business, having reserves when times get hard is wise. It is no different for rental properties, especially since so many of the larger ticket repairs can result in habitability issues. For example, if the furnace goes out and needs replaced, you certainly don’t want to add to the financial burden by delaying the repair, and giving your tenants the legal remedy to abate their rent. Thinking ahead, being prepared and treating your investment like a business can save you a lot of hassle and money. If you’d like more ideas how to properly manage your rental property, feel free to reach out; we’d like to chat!