- Understand What It Means To Be A Landlord
Your state and township have requirements which you must follow. In NJ, the Truth In Renting guide is your key to doing it correctly. Each township has different landlord filing papers AND fire inspection requirements. Check with your municipality.
- Do The Math
Although prevailing rental prices will go a long way toward determining what you can charge, getting the best return on your investment starts with making sure you’re going to get enough rent to, ideally, cover expenses and costs. Work with an accountant to ensure that you take the deductions you are due for a depreciating asset too.
- Screen Tenants Thoroughly
Nothing is foolproof, but it pays off to screen prospective tenants by asking for previous landlord references and running a credit and a criminal records check. Finding good tenants is easier if you use a Realtor. Yes, you’ll pay a commission, but you’ll be starting off from a better position.
Have a walkthrough of the unit with the tenant and take pictures. Have them sign off on the condition of the property before they move in. This will help avoid conflicts over the security deposit if there are damages when they move out.
Real estate is a great investment if people are paying their rent. If they’re not, it’s a horrible investment.
- Have a Good Lease
Work with an attorney to craft a well-written lease, which is crucial to protect your property. Ensure that your own liability insurance is enough and that your tenants have Renters Insurance. A lease will help you evict a tenant or hold them accountable for damage if necessary.
- Consider A Using A Management Firm
You are obliged to fix any problems (leaky faucets, broken furnace, etc.) or find professionals to do it. Don’t rely on neighbors or friends. Property management firms charge a percentage of the rent, usually 10 percent, and are your first point of contact for the tenant.
Get to know what they do, make sure they have good references and that they are insured. In the long run, you will save money and relationships!