Most investors think of properties in terms of gaining a profit rather quickly. But what happens to the investor who cannot sell a property due to the market conditions. Plan B would be to use the property as an income producer and lease it to a tenant.
When becoming a landlord, your first responsibility is to understand and abide by the state landlord tenant laws. These laws dictate the rights that the landlord and tenant have as well as some very specific rules regarding deposits, repairs, and requests. These laws actually dictate portions of the written lease. Always give the tenant a copy of the state laws.
Meticulously screen your applicants. Along with verification of employment, running a comprehensive criminal background check is highly recommended. Previous rental history is also helpful along with a credit history. The same system should be used for each applicant to avoid mistakes and possibly the accusation of discrimination.
If you are not using a property management company, you will need to use a residential lease. Make sure the lease you are using is specific to the state where the property is located. A lease for a home in New York will do no good if the home is located in California. State laws widely vary.
Keep detailed records of everything. Keep all original records. Make copies of checks received and always have the deposits and first month rent payments in the form of a money order or cashier's check. Provide the tenant with a receipt for the payments as well as recording them in a ledger for your own accounting.
Maintain a relationship with your tenant in a professional manner. You are running a business. You are not in business to make new friends. Striving to keep your relationship on a businesslike level will earn you more respect with your tenant.
Once your tenant has moved into the property, conduct regular inspections. Most states require a written notice to be delivered to the tenant when a landlord wants to inspect the home. These time-frames along with any other requirements can be found in the landlord tenant laws.
As most experienced investors are aware, you should always have a backup plan. The backup plan is usually not as favorable as the first choice but does allow for profit to be made. In this case, the profit will just come in at smaller dollar amounts versus one big paycheck.