4 Essentials For Rental Property Owners
Wednesday, July 24
Assets that generate income are essential to realizing financial freedom. The challenge is finding and owning an asset that does not turn into a liability. Rental properties are a vehicle for income that have been used over and over because they have stood the test of time.
Becoming a landlord may sound daunting, but over time the income generated outweighs the expenses. Ask any qualified investor and they will assure that a rental property is an exceptional asset in a sustainable investment portfolio.
It is not always fun and games for the typical landlord. There are good, bad, and ugly sides to being a landlord. That being said, there are a few things of which you can do to keep your investment in good order.
Landlord Insurance To Sleep Good At Night
Insuring your investment property is the first step to take even before finding a tenant to rent your property. Obtaining landlord insurance is a must if you prize your sleep. There is a great feeling created when you know that your investment property is protected with a robust landlords insurance policy. These policies are designed around the risks involved with renting property. Chief among these are protection against property damage, injury and recouping rental income loss.
It would be extremely unwise to gloss over this piece of the puzzle. Don’t think that your homeowners insurance is enough because it is not. Insurance coverage reduces your liability and protects your investment so do your research, compare multiple landlord insurance quotes, and find the right insurance agent to tailor an insurance policy that fits your property.
The Tenant: Benevolent or Malevolent
The number one thing a landlord must do to protect their investment, besides insuring it, is to find the appropriate tenant. A tenant has a unique opportunity to throw a monkey wrench in your plans and it is up to you to properly choose someone who pay rent on time and keep your property in good shape.
There is a never ending flow of horror stories about problem tenants, there is even a TV show about it now. The best way to avoid this is by way finding the right tenant and thoroughly vetting them.
For example, if you have a vacant condo that you need to rent out, don’t start with craigslist, leave that option until last. Start with those you know, like friends, and coworkers. Ask them if they know of anyone looking. If there is a pre established connection there is less of a chance for the tenant to be a problem. After you have someone interested, follow through with an interview and background check. The expenses of a thorough background check are worth it to avoid a bigger loss on your property down the line.
The Trusted Handyman
An income generating property is a physical asset that will need maintenance and repair. There is no way around it. You can take it upon yourself to handle as much as possible but inevitably there will be issues that arise which require a professional.
To have one single resource in the form of a trusted handyman will save you time. Over a few years, the handyman will become familiar with your home and be able to address issues in an efficient manner. A handyman will appreciate this long term relationship and will tend to take pride in maintaining a well oiled machine when compared to finding a different pro each and every time the need arises. If you don’t have a jack-of-all-trades type of friend to assist, then place like Angie’s List are a great place to find recommendations.
Hey Just Checking In
The pride of ownership is something that we all have felt. We take care of things that we own. Renters, however pleasant, do not care as much for a place that they rent compared to one they own. It is a good idea to check in every few months. Small problems can turn into big ones unless they are fixed. Take the time and be proactive about the maintenance of your home. Come over for regular upkeep and take a look around to make sure that things are being kept up to your standards.
Plan ahead to avoid headaches. Chances are that if you find a great tenant and maintain your property, you will experience a positive cash flow that will help your financial positioning for a secure future.
About the Author
Rich Coffman lives on the front range of the Rocky Mountains. He writes about Colorado home lifestyle and real estate among many other things.