Investing in real estate is a lucrative business in America. Only 3 percent of Americans, roughly 7 million people, are actively engaged in real estate investing, earning on average of more than $75,000 each year.
As with any investment, you must be aware of your responsibilities when dealing with real estate. In order to make the most out of your investment, protect yourself and your tenants against potential problems. Explore the following four tips that can help you make the best of your real estate investment.
Put All Agreements in Writing
Image via Flickr by MarkMoz12
Dealing with tenants can be a stressful issue, one that you need to handle efficiently. One of the areas you can’t overlook is setting down all agreements in writing. To remain legally enforceable, you should make sure that whatever details you have discussed and agreed upon verbally with a tenant get confirmed in writing and signed by both parties.
The written agreement should define the roles and responsibilities of both sides. The following list outlines details you should included in real estate agreements:
- Lease length
- Rent amount
- Names of tenant(s)
- Security deposit amount
- Roles and responsibilities of tenant and landlord
- Late and penalty fees
Cover Your Bases by Getting Insured
Insurance is a safety net you cannot do without if you are a landlord. This point is especially important if you live in states that experience natural disasters such as hurricanes and floods. The money you receive from insurance can help fix damages from water, mold, or natural disasters. Before leasing your property, meet with a registered broker to discuss which form of insurance best suits your situation.
Address Problems as Soon as They Arise
The onus is on you as the landlord to fix property problems highlighted by tenants. Take care of problems such as leaks immediately to avoid future costly repairs. For example, water leaks that aren’t fixed can lead to mold development. Removing mold is a costly and time-consuming chore. According to 2017 price estimates from Home Advisor, these costs can range between $450 and $6,000.
Screen Rental Applicants Carefully
Discriminating against people based on race, creed, gender, disability, or religion is unlawful according to the established fair housing laws. However, you are well within your rights to refuse to accept a tenant based on the following criteria:
- Tenants who have poor credit could signal that these individuals may default on their monthly rental payments.
- Tenants whose references have nothing good to say about their behavior and how they treat property warrant some considerations on your part.
- Tenants who have pets. If you do not allow pets on the premises, you will need to make this point clear to potential tenants.
With each of these items listed above, you will need to discreetly let the prospective tenant know the basis of your rejection. You’ll need to do so diplomatically to avoid confrontation and hostility.
As a landlord, you want to make the most from your investment. Apply the above four tips to make sure your real estate investment stays protected.