Education and news for smart DIY landlords!
Owning a rental property has many benefits. It's an opportunity to earn passive income, and you'll be able to sell that property when the market conditions are right. However, you also need to be aware of the associated risks of being a landlord. Here are the top things you can do to minimize personal liability and protect yourself:
When looking for a rental property to invest in, you have to make sure that it's located in a good rental market. If not, you'll have a hard time attracting new tenants. If you need help in researching the best markets to invest in, ask help from a real estate agent.
You know this: Tenants who don't pay rent are the among the biggest hassles of landlording. Not to mention, evicting such tenants is a costly process too. Maintaining detailed payment records, charging late fees, and collecting rent online are a few of the things you can do to minimize risk.
Never ignore any repair work and be sure to address repairs in a timely manner. Not only will this prevent damage from getting bigger, but it also shows tenants that you are proactive and want to keep them happy.
Receipts, official documents, contracts, maintenance requests, notices... Keep a paper trail of these things to defend yourself should a case be filed against you. Keeping records will also make it easier for you to file taxes and avoid missing out on any deductions. Have a digital copy and hard copy of all your records. That way, if you misplace or lose one, you have a backup.
When investing in a new rental property, choose one that's less than ten years old. Older properties do come with unexpected costs due to damage. Even minor repairs can add up pretty fast. If you have an older rental, you can mitigate the risk by performing inspections from time to time and doing the needed repairs right away. It's also a smart practice to have an emergency or reserve fund to cover unexpected maintenance. Because truth be told, there are certain events that you can never predict.
Having an LLC will make it easy for you to separate your business expenses from personal expenses. An LLC for each rental property of yours will safeguard it from liability claims.
Read More: Do Landlords Need To Set-Up An LLC For Their Rental Property?
A lot of environmental hazards can go undetected and put a tenant's health and safety at risk. Inspect for the presence of lead-based paint, mold, lead radon, carbon monoxide, and bed bugs all pose risks. Landlords are responsible for making sure that the rental is free of risks. Do regular inspections and always comply with federal and state laws.
If you’re ready, make Landlord Prep your go-to resource for landlording education. Here, we offer a complete DIY landlording course to get you on the right track. Join our academy today. If you want, you can check out Flavia’s real estate investing webinar first!