Being a home owner can be a great source of passive income. However, being a landlord means more than just finding a tenant, moving him in and waiting for the rental checks to arrive. Real estate entrepreneur Eduard Shapshovich explains some of the key topics that you should be familiar with before buying your first rental property.
United States landlords need to understand fair housing laws before they can find renters. The Federal Fair Housing Act was originally introduced as part of the Civil Rights Act of 1968. In 1988 the law was expanded to protect against discrimination when renting or buying a house. Equal housing means that everyone should have an equal chance of choosing where to live.
Rental discrimination can be upfront or more subtle. When landlords or property managers treat applicants differently based on their inclusion in a protected class, this can be referred to as rental discrimination.
Discrimination against tenants can be intentional or unintentional. Landlords need to make sure they fully understand the law in order to avoid discrimination issues.
The following classes are protected under federal law:
State and local law can also create more protected classes, such as:
While this can be a complex set of criteria, landlords must be willing to market their properties in accordance with fair housing laws. Working with a lawyer can be best to avoid future problems.
Most real estate renters can now find their homes online. By creating listings on various local and national websites, you can find the widest range of people interested in your property. Take into account fair housing laws, create an attractive listing that puts your property in the best possible light.
Tenants want to know the rental price, address, amenities, number of bedrooms and bathrooms, and nearby attractions. It’s also a good idea to upload high quality photos of each room.
Even if your rental business is a “side business,” it is important to treat it like a legitimate business. Compliance with all relevant laws is a must. Treat your tenants with professionalism and avoid getting involved in their personal life. Ideally, a landlord is a service provider and a tenant is a satisfied customer.
It’s best not to wait for something to break to wait for it. This is especially true for large household systems such as heating, air conditioning, and water. It is a good idea to make scheduled maintenance visits to your home or apartments to see if improvements are possible. Your tenants may then show you maintenance issues that would otherwise have gone unnoticed.
One of the best ways to protect yourself from maintenance emergencies is to have service providers call for any emergency. You should have at least one plumber, locksmith, and contractor on call. You can request that your tenants call these providers themselves while you pick up the tab, or you can ask them to contact you as an intermediary.
You need to remember that being a landlord is not a 9 to 5 job. You may receive calls late at night informing you of maintenance emergencies. You may have to deal with insurance problems or costly outages such as heating or air conditioning. In this case, it is best to get home rental insurance that will cover some of these losses. It’s also a good idea to put a certain portion of your rental income into a maintenance fund each month.
All of these requirements for being a landlord seem overwhelming. If you can’t manage your property, there is nothing wrong with signing a contract with a property manager.
You can handle the midnight calls while you focus on the investment aspect of your property. The fees charged by property managers can seem high, but you may feel like your money is well spent if you don’t have to answer a late night phone call for the first time.
If you manage your real estate well, becoming a landlord can be a profitable and fun way to make money. Some home improvement landlords are happy to make the necessary updates to their properties, others are more interested only in profit. As long as tenants are treated fairly in accordance with the law, the way you manage your rental property applies.
Eduard Shapshovich understands the pressures and challenges that a landlord brings with it. He encourages potential landlords to do their homework before committing to their first rental property.