Many rental property investors attempt to mitigate financial and operational risks by hiring professional property managers. Nevertheless, third-party management can be costly and will not insulate landlords from liability relating to legal issues with their tenancies or maintenance problems on a property.
Choose Trustworthy Tenants
Good landlords always screen tenants carefully. You don’t have to accept the first person to apply for a unit. Even if you are eager to fill a vacancy, you have to take steps to determine if applicants will be able to fulfill their obligations as tenants. Your application process should include income verification, credit check, and reference check.
Use a Comprehensive Lease
A lease agreement is a vital referential tool in any residential or commercial tenancy. It spells out each party’s obligations, so you need to specify whether any activities are prohibited on the premises. A lease should also state how each party can terminate a tenancy with or without cause and what happens upon the expiration of a lease term.
Make Turnovers a Smooth Transition
You should begin advertising a vacancy as soon as a tenant serves notice. If you need to show a unit to prospective renters while it is still occupied, stay in close communication with your departing tenants about when you will need access to the unit. One of the provisions that you include in your lease should affirm your right to show the unit after providing reasonable notice to a tenant.
After a tenant vacates, arrange for professional move out cleaning services. It is standard for tenants to leave units in “broom-swept” condition which usually entails a minimal standard of cleanliness, so you will need to schedule a thorough deep cleaning before the next tenant takes possession of a unit.
Comply With Applicable Laws
The statutory laws governing landlord-tenant relationships can vary significantly between jurisdictions. For example, some jurisdictions require landlords to provide a fourteen-day notice to quit for non-payment whereas others require only three days. It is important to note that subsidized tenancies may be subject to an additional set of regulations regarding issues such as notices to quit and rent increases. Familiarize yourself with the applicable law in your area.
Bear in mind that you may need to retain legal counsel to handle issues with a tenancy that advance to court. Some jurisdictions require business entities that initiate actions in district court or housing court to have representation by a licensed attorney.
Ultimately, an investment in commercial property for habitational use can provide you with a stable source of income. In general, good rental property investments carry less risk exposure than trading equities in a bear market or putting your resources into new business ventures. However, this is not to say that being a residential landlord does not involve some formidable risks. Property buyers need to have their eyes open when they assume the role of a landlord in a lessor-lessee relationship. If you will be renting out the property yourself, it is particularly important to be well aware of the risks, rules, and responsibilities associated with residential tenancies.