Are you one of the many home owners who’ve decided that renting out your property is a viable investment opportunity? Just like any investment, you need to do your due diligence. This will help you take the correct measured steps to protect your investment while maximizing your rate of return.
There are a few tips that can help you avoid common missteps made by first time landlords. By keeping this advice in this guide in mind, you’ll be able to navigate your first time renting like a pro.
Put Everything in Writing
Whether you’re renting to a family member, friend, or stranger, put everything in writing. Always protect yourself and your investment by having the rental agreement in writing. This will give you something concrete to bring to court to enforce.
You need more than the rental agreement in writing. You should also create a written record of conversations, agreements, maintenance, inspections, and repairs. This will give you a detailed documented history of the property and your role as a landlord.
This written record will help you maintain the property through routine maintenance. It will also provide you with documentation should a dispute arise with a tenant.
Do Your Due Diligence
A vacant property is better than an occupied property with a problem tenant or a tenant that doesn’t pay. Doing your due diligence will help you thoroughly screen applicants to ensure your tenants meet your criteria.
You can work with services that will provide tenant screening for you. This should include a background and credit check. Aim to answer four critical questions.
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Is the applicant who they say they are?
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Does the applicant have a history of paying their bills?
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Can the applicant afford this property?
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Will the applicant be a responsible resident and take care of the property?
Learn the Law
Not knowing the law is no excuse for breaking it. Take the time to learn the law so that you don’t accidentally take any missteps that could expose you to legal liability. Going to court is expensive and will quickly deplete any potential rental profits.
Fair Housing
While it’s important to screen applicants, home owners cannot use their race, color, religion, sex, handicap, familial status, or national origin to make a determination. The Fair Housing Act prohibits discrimination by housing providers.
Implied Warranty of Habitability
This law protects tenants by requiring that landlords fix anything that “materially affects the physical health or safety of an ordinary tenant." While there is no specific set list, one amenity is specifically mentioned. Your home must have access to a hot water supply that has a minimum of 120 degrees F.
Under Texas law, once a tenant notifies you of an issue, you as the landlord have seven days to make the repairs. If you can’t make the repairs within this time frame, you’ll need to show why.
Perform Inspections
Before a tenant moves in, you should perform a move-in inspection with them. This will ensure both of you agree in writing as to the condition of the home. Document any scrapes, dings, nicks, and signs of damage. Take pictures to document the condition of the home.
When the time comes for a tenant to move out, perform the same inspection. You can then hold the tenant accountable for new damage that goes beyond typical wear and tear. With photographic documentation, it will be easier to show the difference between the original condition and the way the tenant left the home.
Seek Assistance From the Professionals
There’s no shame when home owners admit they don’t have the knowledge, skill set, or time to be a landlord. This shouldn’t stop you from investing in rental property, though.
Working with a property management company allows you to leverage the knowledge, relationships, and skills of people who work in the Texas rental real estate market. You can then trust that your rental real estate investment will be correctly managed.
Contact our experienced and skilled team today and let us guide you through your first time renting.
