So you’ve got a property under contract, and you’re excited that you are going to become a landlord. While it can be a financially and personally rewarding investment, there are lots of things to do in preparation for your new career.
First up, at the home inspection make sure to really take a hard look at what will need to be repaired or replaced once you take ownership of the property. Possible tasks include changing out the toilets to low-flow models, strapping the water heater, changing the door locks, fixing broken doors or windows, repairing damaged drywall and probably just a good old-fashioned scrubbing of the entire property.
Even before you close escrow, you should start making a list of the above items and others that need to be fixed. This will allow you to go home improvement store shopping to figure out a better budget than you previously estimated. (Don’t forget to check popular home improvement store websites for coupons, military discounts and other promotions.) It should also assist you in determining who will be doing the work and getting bids for projects.
Also, if there’s a good tenant already in place, you’ve done yourself a huge favor because you’ll get a security deposit and pro-rated rent at closing. So you possibly don’t have to go in and fix a bunch of items. Make sure to get an estoppel certificate signed by the current landlord and tenant verifying the tenant’s rent and other lease information once you go into escrow.
Once you take ownership of your new property, chances are you’ll need to make changes in these three areas:
Water: Because water issues are prevalent in rentals, it’s a good idea to have a plumber change out all the water valves, hose bibs, water supply hoses, washing machine hoses, dishwasher hoses, etc. In most rentals, it’s probably time to replace them, and doing so before a leak occurs — especially because the property will be occupied then — is just a good move. So put $250-$750 into your budget for this.
Door locks: You should change out the door locks when you take possession of the property and after each tenant moves out. Kwikset’s SmartKey system allows you to rekey the door knobs in place every time a new tenant arrives and is priced similar to normal door locks/knobs.
Flooring: If you need to change out the carpets, take a look at laminate wood flooring as an alternative. It will cost more upfront but should last 10 years or longer. Many laminates are literally tough as nails and look awesome. Plus laminate will save you the hassle of having carpets cleaned during turnover, arguing with past tenants over the cost and having new tenants complain about stains.
You’ll need to get a lease application and lease agreement. Your real estate agent can provide the standard documents for your state, but be sure to add any terms or clauses that are important to you. Once you find a prospective tenant, you’ll need to pull their credit report and conduct a criminal check. Your agent may be able to run credit reports.
Finding a tenant
You can post your rental listings for free on Zillow, and if you join the Zillow Rental Network, you’ll get access to a suite of free tools including online rental applications and Craigslist AdHelper.
If your listing doesn’t get inquiries, you’re probably asking too much for rent. Interview people who respond to your ad on the phone before agreeing to meet with them at the property. This will avoid wasting everyone’s time if they don’t meet your credit, job or rental history requirements.
Once you find a good tenant, move quickly to get a lease signed so you don’t lose them to another landlord’s property.
And finally, realize that being a landlord is a business, and your tenant is your customer. Just like any other business, the better you treat your customer, the more likely you will have a successful business venture.
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