By AFR Mortgage
Along with the exciting prospect of extra income from a rental property, can also come a laundry list of headaches. Most problems stem directly from difficulties within the tenant/landlord relationship. Here are 5 suggestions for avoiding such issues.
1. Obtain references – When you do this, make sure to include requests for past landlords, neighbors, and employers. Get at least two of each, if possible, and do follow through with direct contact to those individuals. You would not be the first to be scammed with fake references!
2. Consider using a property management company – If you cringe at the prospect of hiring someone to do what you had planned to handle, remember the old saying, “to make money, you have to spend a little money”. Having a property manager take care of things is a good way to prevent hard feelings later on down the road. Also, if you are new to the rental property scene, employing a property manager can help you learn the ropes.
3. Make your expectations and requirements clear – Whether you use a property management company or not, compose a contract outlining your rules and expectations. Be clear and concise and address the consequences for not adhering to the rental agreement. Discuss with an attorney or property manager how to ensure that it is legal and binding. Look into your state’s lease agreement laws and find out what will hold up in court. For example, should it be notarized and witnessed and what portion of their deposit are you allowed to keep based on potential infractions?
4. Conduct a careful screening of your potential tenants – To cover all the bases, conduct both a credit check and background check on your prospective renters. You must ask for their permission before running a credit check, and you have the right to decline their request to rent if they refuse.
If you proceed, check with these three credit reporting companies: Equifax, Experian, and TransUnion. A report will also furnish you with a credit score, which is an excellent indicator of your possible tenant’s financial reliability.
For an in depth background check for criminal records, employ a tenant screening company. Expect to pay between $25 and $50 for a detailed report.
5. Hold up your end – Be a proactive landlord by scheduling regular visits just to check on how things are going. Address maintenance issues in a timely manner and remember that when it comes to the next tenant, positive feedback from your past renters will benefit you as well!
If you have any questions about financing a rental property in the United States, be sure to give us a call. We offer multiple loan programs including both fixed rate mortgages and adjustable rate loans for purchasing and refinancing single family and multifamily investment properties.
This article was written by AFR Mortgage and originally published on Afrmortgage