Becoming a real estate investor and thus a landlord requires a unique set of skills. It’s important to understand what is involved with a landlord’s role. One of the challenges for new landlords is deciding to manage their investment properties on their own or hire a property management firm to cover all the details. If needed, Find NJ House offers a number of real estate rental services for new landlords.
A Landlord’s Role:
Preparing the property to rent: As a landlord it is your responsibility to ensure the home is up to city codes and there are no safety hazards; all major systems are in good working order; and that the home is clean for a new tenant. ( paint, flooring and appliances are in good condition) Sometimes it may be a good idea to professionally inspect your property and have it annually landscaped as well.
Pricing your rental: The goal as a landlord is to find long term tenants, vacancy rates for 1 month significantly affect your underlining profits. When your investment property does become vacant, you’ll need to conduct a CMA to determine how to set the rent. Visit other rental properties on the market and compare how your property measures up.
Writing a Lease: Before you start advertising and showing your rental house, it’s important to think through how you want to structure your lease. Major items to consider are: what deposits you’ll require, is your investment property a smoke free building, will you allow pets, if so what insurance policies will you require? You also need to think about What are your late fees, what repairs are the tenant responsible for fixing, make sure your lease adequately protects your financial investment and yourself.
Advertising and showing the property: Once your investment property is prepared and ready for a tenant, now you have to set up appointments and show the property. Sometimes using a local realtor can save you time and money. Search around for an experienced rental agent who is knowledgeable about investment properties. Local realtors will sometimes advertise your home for free in hopes to earn a commission from the tenant. A “win win” for landlords.
Screening and interviewing tenants: This step involves running credit checks, background checks, verifying employment and monthly income and always check personal references.
Collecting the rent: Here is where life as a landlord gets difficult. Tenants having a hard time with the rent will often ask for more time, or to maybe change the rent schedule. As a landlord you need to have the ability to stick with your lease agreement, a skill not easilier mastered by many new multifamily owners.
Handling emergency as well as routine maintenance: As a landlord, you’re legally required to maintain a “safe and habitable” place for your tenants to live. You should be prepared to handle routine maintenance on your home’s major systems (such as maintaining the furnace, keeping gutters clean of debris, shoveling the walk). You’ll also need to have a local handyman on call in case of emergencies. Remember it is in your best interest to keep your investment property in good safe condition.
What to do about lease violations: Whether the neighbors complain about excessive noise, a puppy appears when the lease agreement specifies that no pets are allowed, or your tenant is late with the rent, you’ll need to be prepared to take corrective action. Going to landlord tenant court is part of the game. If necessary you can hire a real estate attorney or property manager to handle this for you.
How to prepare for taxes: The IRS considers owning investment property a business and keeping the proper records of repairs, income and expenses is vital for your financial survival. Detailed records will also be important when you decide to sell your investments in the future. Hire a professional tax accountant and take advantage of all the expense and right offs one has when owning an investment property.
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