5 Tips for First Time Landlords

As a first time landlord, owning your first rental property can be a nerve racking experience. No doubt you would prefer to benefit from the experience from others rather than learning the ropes through the school of hard knocks. Here are some tips that will save you a lot of headache and hassle.

Always Get it in Writing

Even though a verbal lease agreement may be binding in the state where you own investment properties, if you have to bring your tenant to court it will be their word against yours. If you want to save yourself a whole lot of hassle, make sure that all leases are in writing and have been signed and dated by both parties.

Lease agreements are not the only thing you want in writing. It is good business policy to keep a written record of conversations, commitments, inspections and repairs. If your tenant, who is behind in their rent, agrees to double up rental payments then why not quickly type up a quick agreement and have them sign it. Once their signature is on a document, they will be much more likely to follow through with any commitments. The same can be true if you make any promises to your tenants. In this way, you will minimize any communication problems and misunderstandings. The little extra time, ink and paper will save you hours of trouble.

Stick to a Budget

The last thing you want to do is to create a slumlord reputation, but the other extreme can be just as devastating. New and first time landlords frequently spend too much money fixing up their new property. Spending more than your budget allows is a quick way to change a profitable cash flow investment into a money pit. If your budget allocates 10% of the gross rent will be set aside for repairs, make sure you stay within that amount. That may mean that you will have to schedule your maintenance and upgrades. Do not be afraid to tell your tenants that though you see that an item needs attention, you will have to wait unit this date to complete it. Of course, there are some issues that will need immediate attention, so do not forget to have some of that budget set aside for emergency repairs.

Complete a Move-In and Move-Out Inspection

If you want to make your tenants responsible for any damage they caused to your unit, then you will need to be able to prove that they caused the damage. The easiest way to do this is to complete a move-in inspection. Take the new tenant with you and document every little nick, ding and scrape. Take a picture of all existing damage. Then have your tenant sign that they acknowledge each of these items and are accepting the unit “as is.”

When it is time for them to move out, you can go through the unit with the move-in checklist and a copy of your photos and compare. Any new damage will be easy to prove and save you a ton of hassle.

Understand Landlord and Tenant Rights

Federal and State laws have been enacted to protect the rights of both the landlord and the tenant. It is good to be familiar with those rights so that your tenants cannot take advantage of you. It will also benefit you to know your rights as well.

This will come in handy when you want to schedule a periodic property inspection or need to handle an eviction. If you want to have the power of the law on your side, you will need to adhere to their guidelines. Here are some resources that may help:

• Landlords’ Maintenance and Repair Duties prepared by the North Carolina Attorney General
• Security Deposits prepared by the North Carolina Attorney General
• Fair Housing prepared by the North Carolina Attorney General
• Landlord/Tenant Law prepared by the Legal Aid of North Carolina
• North Carolina Private Landlord/Tenant Law Overview prepared by the North Carolina Justice Center
• Landlords & Tenants – This is the Law prepared by the North Carolina Bar Association

Hire a Property Manager

Being a landlord can take a lot of time. If you are employed in another field, the demands of being a landlord may be adding unnecessary stress. One way to virtually eliminate the anxiety that comes with locating reliable tenants; promptly handling tenant calls and dealing with renter complaints is to hire a property management company. Their fees will be based on the gross rent they collect - which means that they only make money when you make money. This is an added incentive to make sure all your units are full and that the rent is collected on time each month.

Look for an agency that also has a real estate license and is experienced in the industry. Make sure that they carry Errors and Omissions (E&O) Insurance. As added peace of mind, ask for the names and phone numbers of some of their past and/or present clients so you can get some testimonials.

Being a first-time landlord does not have to be wrought with bad experiences. Making sure everything is in writing; knowing landlord and tenant law and sticking to a budget are simple ways to make owning an investment property enjoyable and financially rewarding.