How to Become a Landlord for the First Time

A landlord is a person who owns property and rents it out to residential or commercial tenants. At its best, being a landlord consists largely of collecting rent checks and maintaining property, but at its worst, being a landlord can involve dealing with nuisance tenants, property damage, insurance claims or vacant units.

Instructions

1. Consider carefully when buying property. Before buying property, find out the going rental rate of similar local property. Focus on property that can be afforded with a monthly mortgage payment equal to or less than the going rental rate. Budget for renovations and plan on expenses exceeding expectations.

2. Get insurance. Consult with an insurance professional as to what forms of insurance are necessary for the property. Tenants can be expected to maintain renter's insurance, but the landlord should insure against fire, flood or other relevant contingencies.

3. Have a lease drawn up. Either using a form lease or hiring an attorney, draw up a formal lease that encodes all your expectations of a renter and your responsibilities as landlord. The lease will be a important legal document framing the relationship between you and your tenants, so this should be taken very seriously. Also consult state and local laws for standard practices regarding leases and tenancy.

4. Advertise. Vacant property doesn't earn any money for a landlord. As soon as possible, advertise in appropriate local resources. Don't underestimate the power of online message boards, such as Craigslist, to produce interested queries very quickly. Always screen tenants carefully, conducting a credit check and explaining their responsibilities under the lease.

5. Hire a property manager if necessary. Part of a landlord's obligation is to maintain the premises. If this involves a large area or multiple sites, it can be helpful to hire a full-time property manager for maintenance and basic clerical functions.

6. Hire an accountant. A landlord will likely have checks coming in from tenants and checks going out to cover mortgage payments. There are also likely to be expenses related to property taxes and maintenance. The complications of being a landlord likely mean that hiring an accountant, at least for the first few years, is essential to filing accurate tax returns.

References

• http://www.propertydo.com/first-time-landlord.html
• http://paycheck-chronicles.military.com/2009/02/becoming-a-landlord-be-prepared.html

Resources

• Becoming a Landlord
• Are You Becoming a Landlord?