Owning rental property involves risk. If it didn’t, then everyone would do it because it’s a great investment strategy. To be a successful landlord, you have to mitigate that risk. Three of the primary areas of risk are legal risk, property damage and financial risk.
Assuming the rental property is in good, safe condition to begin with, the best place to begin your risk mitigation is with the tenant screening and background check. All good landlords do a thorough job of screening tenants. Check credit history, criminal history and eviction records. Make sure you are able to verify all sources of income and do careful employment and rental reference checks. Getting a high quality tenant in place is a good way to avoid lawsuits, property damage and loss of rent.
The second thing you must do to reduce your risk is to conduct regular property inspections. If you don’t show up at the property from time to time, the tenant might get the idea that no one cares about it. You want the tenant to know that you care very much about the home, and you’ll be willing to take time out of your day to go and check on the property. Look for any lease violations as well as unreported maintenance issues. Check for proactive maintenance issues too, and note any items that might be in need of repair down the road. If you catch problems early enough, they won’t be as expensive as they can be when they turn into emergencies.
The best way to avoid legal risk is by hiring a good attorney to draw up your lease. Find a lawyer specializing in landlord and tenant law so you can ensure your rental agreement covers everything it needs to. With a good lease, you have much more control over a tenancy and the property. Don’t use a basic paper agreement that you find online. You will also need good legal advice on how to address bad tenant situations and lease violations when they occur. If you don’t handle them correctly, you can have a bigger problem than you started with.
If you can mitigate these risk factors, you’ll be far more successful with your rental property and you won’t find yourself in any legal or financial trouble. Please contact us at Sarasota Management and Leasing if you have any questions on the risks involved in rental properties.