Being a residential landlord can be a great source of passive income. However, being a landlord is more than simply finding a tenant, moving them in, and waiting for the rent checks to arrive. Real estate entrepreneur Eduard Shapshovich explains some of the top issues you should be familiar with before buying your first rental property.
Fair Housing Laws
Landlords in the United States need to understand fair housing laws before they can begin looking for tenants. The federal Fair Housing Act was initially put in place as part of the Civil Rights Act of 1968. In 1988, the law was broadened to protect against discrimination when renting or buying a home. Equal housing opportunity means that every person should have the same chances of choosing a place to live.
Rental discrimination can be upfront or more subtle. When landlords or property managers treat applicants differently based on their inclusion in a protected class, this can be called rental discrimination.
Discrimination against renters can be intentional or unintentional. Landlords need to make sure that they fully understand the law to not run into any problems with discrimination.
Under federal law, the following are protected classes:
- National Origin
- Familial Status
- Physical or Mental Disability
State and Local Law
State and local law can also create more protected classes, such as:
- Veteran or Military Status
- Gender Identity or Expression
- Sexual Orientation
- Source of Income
- Criminal History
While this can be a complex set of criteria, landlords need to be prepared to market their properties in accordance with fair housing laws. Working with an attorney may be best to avoid future problems.
How to Find Tenants
Most property renters now find their homes online. Creating listings on various local and national websites can help you find the broadest sample of people interested in your property. Keeping fair housing laws in mind, create an attractive listing that puts your property in its best light.
Tenants will want to know the rental price, the address, the amenities, the number of bedrooms and bathrooms, and nearby attractions. It is also a good idea to upload good quality photos of every room.
Treat Your Property Like a Business
Even if your landlord business is a “side hustle,” it is important to treat it like a legitimate business. Complying with all relevant laws is a must. Treat your tenants with professionalism and avoid getting involved in their personal lives. Ideally, a landlord is a service provider, and a tenant is their satisfied client.
Be Proactive with Maintenance
It is best not to wait until something breaks to maintain it. This is especially true of major home systems like heating, air conditioning, and water. It is a good idea to make scheduled maintenance visits to your homes or apartments to see whether there is anything that could be improved upon. Your tenants may then show you maintenance issues that could otherwise have gone unnoticed.
One of the best ways to protect yourself from maintenance emergencies is to have service providers call for any emergency. You should have a plumber, locksmith, and contractor on call at a minimum. You can require that your tenants call these providers themselves while you pick up the tab, or you can ask them to contact you as the middleman.
Expect Emergencies to Occur
You must remember that being a landlord is not a 9 to 5 job. You may get calls late at night informing you of maintenance emergencies. You may have to deal with insurance issues or costly breakdowns like heating or air conditioning systems. In this case, it is best to have landlord insurance that will cover some of these losses. It is also a good idea to put away a certain portion of your rental income each month in a maintenance fund.
Property Management Companies
All of these requirements for being a landlord may seem overwhelming. If you can’t handle managing your properties, there is nothing wrong with contracting with a property manager.
They can handle the midnight calls while you focus on the investment aspect of your property. The fees charged by property managers can seem steep, but you may feel that it is money well spent the first time you don’t have to take a call late at night.
Becoming a Landlord
If you manage your properties well, becoming a landlord can be a profitable and enjoyable way of making money. Some landlords who are do-it-yourselfers enjoy making necessary updates to their properties, and others are more interested in profit alone. As long as tenants are treated fairly in accordance with the law, how you manage your rental property is valid.
Eduard Shapshovich understands the pressures and challenges that come along with being a landlord. He encourages prospective landlords to do their homework before committing to their first rental property.