Once you have decided to rent out a property and become a landlord, you may feel ready to jump in and start earning rental income. But before you start searching for tenants, you need to make sure that both you and your rental are ready.
As a landlord, you’ll be running a business. And you need to make sure you follow all the rules and best practices to make your venture a success.
Creating Your Business
To start, make sure you register for a business license if required in your local or state jurisdiction. Some locations may also require inspections or additional approvals for landlords, so be sure to read up on the laws. You can learn more about the process in DC and Virginia here.
As you prepare your home for rental, document and keep records of all repairs, maintenance, and improvements performed on the property with pictures, video, and receipts for financial expenditures. These are tax-deductible business expenses. While you’re at it, create a system for keeping all receipts and records for your property. Keeping track of all of your income, expenses, applications, leases and other documents related to the rental will help you run your business efficiently and make tax time a little easier.
Next, you should prepare a rental agreement. Sites like Nolo offer guidance on creating a rental agreement or you may consider consulting an attorney to ensure your lease will protect your interests.
Finally, check with your insurance company. You will need a landlord’s policy for the property. As you are preparing your business, document all transactions with contractors, attorneys, brokers, property managers, and tenants.
Attracting Quality Tenants
Once you have taken all the steps to set up your business, you can start thinking about finding renters. Assess your property based on its size, location and amenities and decide how you’ll get the word out to potential renters.
You can find tenants by placing ads on websites such as Craigslist or on social media sites like Facebook. Or you could hire a broker or a property manager to find prospective tenants. Both brokers and property managers charge a fee to place a tenant and likely have solid marketing experience. Property managers typically also have extensive experience screening tenants and setting rental rates, in addition to day-to-day management of rental properties.
Situations That Could Require Professional Help
The process of preparing a rental and creating a new business can be time consuming. Depending on the complexity of the local laws, condition of the property and other factors, it is sometimes more than first-time landlords expected to deal with. If you’re overwhelmed or encounter a challenging situation, an attorney that specializes in landlord-tenant issues or a professional property management company can provide answers and expertise.