Owning and renting real estate is one of the best ways to create wealth. If you’re just getting started in real estate investing, here are three tips for first-time landlords that will help make your real estate investment a success.
Great Tips For First-Time Landlords
First, always charge prospective tenants a small fee for processing their application to rent your property.
This is the most important of the three tips for first-time landlords.
Collecting a small fee serves two purposes. First, it covers the actual cost of running a credit report, verifying the tenant’s income, and doing a background check.
But just as importantly, it weeds out prospective tenants who really aren’t serious about renting your property.
Experienced property managers will tell you that there are actually people who go around town pretending to be tenants and applying for property that they have no intention of renting.
Never Negotiate On The Rent
Negotiating on the long-term rent with a tenant almost always backfires on a new landlord.
That’s because if you give the tenant a reduced rent, they will come back for more . . . and more, and more.
This is the second most important of the tips for a first-time landlord.
Now, in order to not negotiate on the rent, the rent has to be based on comparable rentals in the area. This means the landlord needs to survey the market and set a fair rate for their rental real estate.
Know The Landlord-Tenant Law
Some markets are landlord-friendly, and some are tenant-friendly.
Sometimes this varies by asset class as well. In a given area the laws could be tenant-friendly for residential real estate, but decidedly landlord-friendly for commercial real estate.
As a first-time landlord it’s important to know the landlord-tenant law for both the market and the property class that you own, operate, and rent to tenants.