Now that you have your investment property ready to rent, knowing how to properly manage your property is important. Here are some tips for the newbie real estate investor in being a landlord.
Screen and background check your prospective tenants. I can’t emphasize enough the importance of this. No matter who they are, you should definitely do the following:
Verify employment and income. Do not just take the tenant’s word for it, call the employer.
Do a credit check. Check credit scores, 700+ are great, 600-700 are good below that are ok to dismal. Also check the actual credit report to see if they are slow pay or no pay.
Do a court check. Check civil and criminal court records. Do they have judgments in civil matters? Have they committed any crimes, felonies or misdemeanors and what kind of crime?
Check with their last landlord. Were they evicted? Slow pay? Good or troublesome tenants?
You can do a thorough background check using online services, but don’t shortchange the calls and local court checks.
Don’t just use a standard lease from the internet. Your lease is the contract between you, the Landlord (also called a “Lessor”) and your Tenant (also called a “Lessee”). If you have issues and need to enforce the rules, if what you are complaining about isn’t spelled out in the “4 corners of the document” meaning within that document, not verbal promises or verbal changes.
A “standard” lease pulled off the internet could have clauses that conflict with state or local laws.
It may not have everything that you want or have more in it that you want. There are many elements of leases and they contractually obligate both parties to the terms of the lease including length, rental amount, late fee’s and a huge host of other terms from move in to move-out.
Have a local attorney draft you a standard lease and discuss all the terms with him or her so that you understand it well enough that you can explain the terms to your prospective tenants if necessary.
Seriously consider using a property management company. They can handle everything you need. They will do the vetting of prospective tenants. They will have a strong lease that covers the important things you, as a landlord, are concerned with. They will collect the rents, do necessary evictions and handle any emergency repairs. They will also do any necessary maintenance to the property. It will remove the burden from you.