New investment property owners may take a little while to get accustomed to being a “landlord,” but there are many reasons to embrace your new identity quickly. For one thing, your role as a landlord may feel like a neighborly connection, but you are fundamentally in a business transaction, so you want to make sure your choices along the way all reflect that professional distinction. To make your journey as a landlord successful, try these tips and tricks for getting off on the right foot!
Landlord, Not Friend or Buddy
It’s easy to decide you like your tenants; if anything, liking your tenants is a beautiful thing! However, liking your tenants is a slippery slope to becoming friends, and that can create trouble down the road. Your tenants need you to be professional and impartial; especially if you have multiple units, treating some tenants like friends and others like customers is going to create resentment and make you seem partial if any disputes arise. It’s also possible for overly casual interactions, like friendly hangouts, to make you look like you don’t care about when rent comes in, or that you will be okay with violations like smoking or pets in your property. Recognize that you can lose these friendships quickly if you don’t set up reasonable professional boundaries and keep conversations cordial and pleasant but not ultra-informal.
For the safety of your business and your tenant relationships, save any friendship with tenants until after they’ve moved on, no longer living in one of your properties. By then, you may also know enough about your tenants through professional interactions to be glad that you didn’t get too informal.
Understand Every Element of the Lease
One of the easiest ways to ensure that you have an airtight lease that is legally binding and gives you all the rights that you need as a property owner is to work with a Dallas based professional property management company. They’ve got the experience necessary to be able to evaluate your lease and give you pointers on how to customize it for your needs. This is one option for becoming an expert on what you are asking your tenants to sign.
Unfortunately, some landlords who manage their properties use a boilerplate lease they find on the internet, assuming they are all the same. This practice can open you up to legal liability and make it much easier for a “professional tenant” to take advantage of common loopholes and refuse to pay you. If you don’t work with a property management company, definitely hire a lawyer to write a lease so that you are not giving away your rights or making it possible for you to be sued down the road. This legal step is very important and not something to skip.
Find the “Just Right” Rental Rate
There are plenty of ways to price a rental property wrong: some new landlords go for a bargain basement rate, which sometimes results in tenants who don’t respect the property but results in lost revenue for you. If you go too high, assuming that the “right tenants” will choose you, you’ll lose revenue through vacant months. Finding the perfect rate is one of the essential parts of your choice since you’ll need that money for rental repairs and maintenance, as well as to pay any mortgage, property tax, and insurance that you must pay for the unit.
Do your research on the Dallas market and see what other similar units in your area go for, consider how you want to incentivize new tenants and keep your prices going up a little bit each time the market in your area grows more competitive. Your rental prices can be responsive to the situation: if you’ve had consistent tenants for 2 or 3 years, it is fine to keep the rental rate the same, or even give them a bit of a discount, to retain clients and not have to advertise for that unit again.
Screen Your Tenants
Using all the legal options available to you, screen potential tenants and assume that the more information you use to make your decision, the fewer headaches you’ll have later. Your tenant screening process should reveal any red flags that show that this person may not be able to afford the monthly rent, or that they have a long history of paying similar rent promptly. To do this, make sure you verify tenant income accurately, even if you are prepared to hear the situation and make a flexible decision. This information keeps you from having to deal with late payments or eviction down the road, which can be costly and time-consuming.
Finding the Right Tenants Starts with You!
There’s one more handy tip we can share with you: maintain your Dallas property! This will keep your tenants happy, raise your property value, and ensure you don’t have to make expensive repairs down the road. If keeping up with tenant screening while juggling all of the above sounds exhausting, use our FREE tenant screening checklist to keep yourself organized.