A recent study found that 68% of investors plan to leave real estate to their heirs. 56% of them have never told their heirs about these plans.
This leads to a rise in accidental landlords who receive and must manage a rental property. This may also happen to owners who can't sell their current home.
The situation is daunting because you have to learn a new business quickly. Read on for five tips for accidental landlords.
1. Do Your Research
Any new landlord has a lot of preparation to do before they begin. Make sure your mortgage lender or broker will allow you to rent out the property. You may have to switch to a buy-to-let mortgage.
Look into the current market. Check the rental rates of similar properties in your area as inspiration for what your rental rate should be. Get a rental valuation for an even clearer picture.
Find out the demographics of your area. Who's living here, and what are they looking for?
Look into landlord-tenant laws related to areas such as:
- Fair housing
- Tenant screening
- Taxes
- Rent collection
- Security deposits
- Evictions
2. Get the Property Ready
One of the most important and widespread landlord responsibilities is keeping the property safe and habitable. This should begin before you ever rent it out.
Handle necessary improvements, from a new paint job to fixing the boiler. Add in any furniture you think will make it more attractive.
Perform inspections and safety checks. Right-to-rent checks must be completed before tenants move in. Gas safety checks are required every year. You should also test the electrical appliances and smoke and monoxide detectors.
These checks come along with important paperwork. You'll need a valid EPC or Energy Performance Certificate with a rating of at least E before renting the property out. You'll also have to complete papers to register and protect security deposits.
3. Get Insurance
Let the property's current insurance provider know that you're renting out the property so that you don't invalidate your current policy. Then, start looking for a new, landlord-specific insurance policy.
This isn't legally required but does have several benefits. It protects your investment and tenants. Certain policies may even pay for missed rent.
4. Start Attracting Tenants
Finding tenants requires proper marketing. Show off your property's best side with professional listings.
Establish a proper, thorough tenant screening process. Look into their background, ask for references, and interview them.
Start creating a relationship with your tenants when they move in. Respond to their requests as soon as possible and try to make the property feel like home.
5. Get a Property Manager
Anything that's dropped on you suddenly is difficult to manage at first. Accidental landlords may have limited time, struggle to handle daily maintenance and tenant issues, or live far away from the property.
Don't give up because you feel overwhelmed. Consider hiring a property manager instead. They can handle all your landlord responsibilities for you.
Where Can Accidental Landlords Get Help?
Accidental landlords can take a few steps to get the most out of their unique situation. They include researching, preparing the property, getting insurance, attracting tenants, and hiring help.
Chicago Style Management works to increase investor's profits, give tenants a better home, and improve the Chicagoland area. Contact us about our property management services today.
