{"id":140894,"date":"2021-12-07T16:10:02","date_gmt":"2021-12-07T23:10:02","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=140894"},"modified":"2023-08-04T14:06:00","modified_gmt":"2023-08-04T20:06:00","slug":"rent-by-owner-success-what-all-first-time-landlords-should-know","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/rent-by-owner-success-what-all-first-time-landlords-should-know","title":{"rendered":"Rent By Owner Success: What All First-Time Landlords Should Know"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC7555587403&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p><span style=\"font-weight: 400;\">Becoming a landlord for the first time can be a daunting experience. It could be that you are an accidental landlord and want to be successful with your first \u201chouse for rent by owner.\u201d Or, you may have purchased your first investment property to earn passive income. Whatever the case, being a landlord is an excellent way to build wealth if you are willing to do the hard work.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Most first-time landlords start as private owners with one individual unit. However, being a successful landlord involves more than just finding a tenant and collecting monthly rent. You also have to consider your legal obligations, screen potential tenants, handle disputes, and quickly fill any vacancy that occurs.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Unfortunately, many first-time landlords make critical mistakes when renting out their first units. This could be renting the property to a bad tenant, failing to keep up with maintenance requests, or <\/span><a href=\"https:\/\/www.biggerpockets.com\/forums\/87\/topics\/647810-ten-common-eviction-mistakes\" target=\"_blank\"><span style=\"font-weight: 400;\">making mistakes when evicting a delinquent tenant<\/span><\/a><span style=\"font-weight: 400;\">.&nbsp;To help you avoid those types of mistakes, here are five tips for making your first \u201crent by owner\u201d property a success.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><b>What is rent by owner?<\/b><\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">Rent by owner is a common term used to describe a private individual who is a landlord who typically has only one or two units. When houses are advertised as \u201crent by private owner,\u201d it means that the tenant will deal directly with the owner rather than a real estate agency or broker.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">There are advantages of marketing your rental property as a house for rent by owner. One major advantage is that many renters actively search for such rental units, and using this term can make your unit appear in the search results. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">It can also help your listing stand out against the competition with other renters, as some tenants prefer having a closer relationship with the landlord over dealing with a \u201cfaceless\u201d organization or agency.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><b>Five tips for becoming a successful first-time landlord&nbsp;<\/b><\/h2>\n\n\n\n<p>Simply being a rent by owner landlord is not always enough to set you apart. A private owner who rents a property may also want to provide services that other private landlords fail to deliver. This may help to increase the chances of success. <\/p>\n\n\n\n<p>For example, you can offer online payment options, have repair contractors on call 24\/7, and provide landscaping services\u2014all of which can set you apart from the competition.<\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">In addition to offering extra services, there are a few other ways you can make renting out your first unit a success. These include:&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><b>1. Treat your landlord role as a rental business<\/b><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">It&#8217;s important to remember that as a private owner who rents out properties, you are running a business. You have legal obligations to meet, and you must maintain business relationships with your tenants.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">For example, it&#8217;s OK to work out a payment plan with a struggling tenant, but you should be sure to establish rules and follow through on late payments and fees. At some point, you may even have to evict someone you like if the tenant has fallen behind on rent payments.&nbsp;You should also always be prepared to consult with lawyers, accountants, and insurance companies so you know what to do when things get complicated.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Hiring a property manager may also be out of the question if you only manage one unit. In order to treat being a landlord as a rental business, you will have to get up to speed on learning how to manage a property successfully\u2014and that includes finding the right tenants for your property.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">To find quality tenants, make sure to:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Have a thorough tenant screening process <\/span><\/li>\n\n\n\n<li>Do<span style=\"font-weight: 400;\"> background checks on prospective tenants<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Contact previous landlords to get references<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Ensure the lease terms have clauses about pets, payment methods, cleaning, maintenance, and late fees<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Check employment records<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><b>2. Manage the rental property properly<\/b><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Being a successful landlord means more than simply ensuring your tenant pays rent on time\u2014you also have to manage the property. This is an intrinsic part of renting out your own properties. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">In addition to property management, it is vital to <a href=\"https:\/\/www.biggerpockets.com\/blog\/how-to-prepare-your-property-for-renters\" target=\"_blank\" rel=\"noreferrer noopener\">prepare your house for renters<\/a> and ensure that you always act in line with the law with respect to your tenant\u2019s rights.\u00a0Landlord-tenant laws are extremely important, and, as such, you need to be aware of your legal obligations. These include holding the security deposit, keeping the property inhabitable, and respecting the \u201cCovenant of Quiet Enjoyment.\u201d It is also vital to check federal and state laws regarding rental properties.\u00a0<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Acting in accordance with the law isn&#8217;t the only requirement, though. You also need to do what you can to keep the tenants happy. This includes: <\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Keeping the rental property well maintained<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Being quick to resolve disputes<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Respecting your tenant\u2019s privacy<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Offering a pet-friendly rental unit<\/span>, if it makes sense for your property<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-media-text alignwide is-stacked-on-mobile\"><figure class=\"wp-block-media-text__media\"><a href=\"https:\/\/www.biggerpockets.com\/guides\/landlord-rental-property-management?itm_source=ibl&amp;itm_medium=blogad&amp;itm_campaign=llguide\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" width=\"500\" height=\"500\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/landlord-guide-ad.png\" alt=\"\" class=\"wp-image-137022 size-full\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/landlord-guide-ad.png 500w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/landlord-guide-ad-300x300.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/landlord-guide-ad-150x150.png 150w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/landlord-guide-ad-200x200.png 200w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><\/figure><div class=\"wp-block-media-text__content\">\n<p>Purchasing your first rental property is just the beginning of your real estate journey, because being a good landlord is almost as important as making good deals. BiggerPockets&#8217; free guide <a class=\"rank-math-link\" href=\"https:\/\/www.biggerpockets.com\/guides\/landlord-rental-property-management?itm_source=ibl&amp;itm_medium=blogad&amp;itm_campaign=llguide\" target=\"_blank\">How to Become a Landlord: Managing Rental Properties for Real Estate Investors<\/a> will teach you everything\u2014from setting rent to handling evictions.<\/p>\n<\/div><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><b>3. Decide on a method to collect rent<\/b><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Offering your tenant uses a suitable online method to pay their rent will help keep your cash flow healthy. It is best to avoid accepting rent checks or cash payments because they can cause a number of problems. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">For example, checks can go missing or be held up in the mail, and they also take a long time to process. Paying rent by cash is also problematic, as you don\u2019t have a reliable paper trail.&nbsp;<\/span><\/p>\n\n\n\n<p><b>Related:<\/b> <a href=\"https:\/\/www.biggerpockets.com\/blog\/digital-rent-collection\" target=\"_blank\"><span style=\"font-weight: 400;\">Is it time to ditch your rent checks?<\/span><\/a><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">That&#8217;s why most successful landlords use a dedicated rent payment app that is easy to navigate for their tenants. These electronic payment methods are secure and ensure that you always have proof of payment. Plus, many rent collection apps have landlord-friendly features, like the option to split rent payments between roommates, make flexible rent payments, or process rental applications.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">But should you use digital wallets like PayPal, Zelle, or <\/span><a href=\"https:\/\/www.biggerpockets.com\/blog\/venmo-changes\" target=\"_blank\"><span style=\"font-weight: 400;\">Venmo to collect rent<\/span><\/a><span style=\"font-weight: 400;\">? While these digital payment methods are acceptable for making online payments, they are not great for landlords. For example, you can\u2019t block partial payments, which could hamper attempts to evict a non-paying tenant.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><b>4. Keep the rental property well-maintained<\/b><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">It&#8217;s extremely important to keep your property maintained, but maintaining a rental property is more complicated than keeping up with your own home.&nbsp;For starters, the safety standards in a rental property are typically more stringent. For example, there may be state regulations on smoke and carbon monoxide detectors.&nbsp; <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">You also must ensure that the tenant has access to heating, hot water, and garbage collection. You may also have to ensure that there is no asbestos or lead-based paint in the building, which are health and safety hazards that must be dealt with.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">While you may put up with leaky faucets at home, your tenant may not\u2014and other minor issues may cause unhappy tenants, too. As a successful landlord, you must always be willing to keep up with the repairs\u2014no matter how minor\u2014to keep tenants happy.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">To ensure your tenant\u2019s safety, you should also perform routine checkups of the premises to ensure everything is in order. It is also vital to have a good <\/span><a href=\"https:\/\/www.biggerpockets.com\/blog\/rental-maintenance-strategy\" target=\"_blank\"><span style=\"font-weight: 400;\">maintenance schedule<\/span><\/a><span style=\"font-weight: 400;\"> to prevent expensive repairs.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Some tips to maximize your rental income include:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Consider allowing pets and require tenants to pay a pet deposit<\/span>.<\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Carry out regular market research and calculate market rent accordingly.<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Reduce vacancy periods by building an excellent reputation.<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Consider offering short-term rentals.<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Always screen tenants and carry out credit checks<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><b>5. Get landlord\u2019s insurance and require renters insurance<\/b><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">If you have a \u201chome for rent by private owner,\u201d you must also have landlord insurance. This protects you from hefty building repair bills and legal fees if damages occur to the property. This type of insurance coverage also covers the cost of temporary housing if your tenant can\u2019t live in the unit while repairs are ongoing.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">It is also a good idea to require your tenants to obtain <\/span><a href=\"https:\/\/www.biggerpockets.com\/blog\/renters-insurance\" target=\"_blank\"><span style=\"font-weight: 400;\">renters insurance<\/span><\/a><span style=\"font-weight: 400;\">. You should have a clause in the rental agreement to ensure that tenants take out insurance. This protects a tenant\u2019s property in the event of a fire, flood, or break-in. It also saves you from lawsuits if someone injures themselves in the rental\u2014even if it was the tenant\u2019s fault.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><b>Final thoughts<\/b><\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">Regardless of whether your rental property is being used for extra income or as your only source of income, it\u2019s vital to manage your rental business correctly.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Before your first tenant moves in, it\u2019s necessary to sign the lease agreement, collect the first month\u2019s rent and security deposit, and conduct a rental inspection with the new tenant.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">This way, you can run a successful rental property business, even if you only have one unit.&nbsp;<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many first-time landlords make critical mistakes when renting out their first units. To help you avoid those types of mistakes, here are five tips for making your first \u201crent by owner\u201d property a success.<\/p>\n","protected":false},"author":612767,"featured_media":140928,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7119,5183],"tags":[190,5060,7296,1418,59,7],"class_list":["post-140894","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-biggerpockets-daily","category-landlording","tag-landlord","tag-landlording-business","tag-landlording-rental-properties-2","tag-property-management","tag-real-estate-investing","tag-investing"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/140894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/612767"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=140894"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/140894\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/140928"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=140894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=140894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=140894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}