WHAT LAWS AND REGULATIONS DO I NEED TO COMPLY WITH WHEN BECOMING A LANDLORD?
As a landlord, there may be local laws that you must comply with. Check with your city or town to see what rules and regulations are in place for people who rent property to others.
For example, you may need a business license, a rental license, or a zoning officer may need to inspect your property.
It’s also a good idea to check with your mortgage company, as some may have stipulations if the property is to be used as a rental.
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WILL MY HOMEOWNERS INSURANCE COVER MY RENTAL PROPERTY?
As a landlord, you typically need more protection in certain areas where landlords may not. For example, landlords often require greater liability protection against injury or property damage claims.
Allstate ‘s landlord policy* insurance package includes liability protection to help cover damages you may be required to pay.
Plus, if you’re sued for a covered loss, Allstate steps in to provide legal counsel to defend you.
An important protection that Allstate’s landlord policy insurance package offers is fair rental income, which helps protect you if your property becomes uninhabitable.
Under any covered loss, you are covered for the rental income you would receive from your tenants for the time it takes to replace or repair your rental unit, up to 12 months.
You may also want to consider adding optional coverages to your landlord’s policy to ensure you’re adequately protected in the event of a loss.
For example, theft, vandalism, and building code coverages can be a wise investment to better protect your property.
HOW MUCH SHOULD I CHARGE FOR RENT?
Rental prices are primarily market driven, so the first step in determining how much to charge for rent is to review the monthly cost of comparable properties in the area.
For example, rental property in a popular neighborhood will generally command a higher rent than a similarly sized property in a less desirable location.
Here are some tips to help you determine a fair monthly rent:
Get in touch with other local landlords or real estate agents to see what they are charging
Look up rental costs with multiple listing service or Zillow
Check the newspapers or Zillow to see what’s already on the market in your neighborhood
Keep in mind that the economy, the local real estate market, the location, and the condition of the property can also affect what is considered a fair market rent.
Other factors to consider when determining what to charge include square footage, number of bedrooms, number of bathrooms, and yard/lot size.
Do not forget to take into account the costs that you will incur as a landlord and determine in advance what the tenant will have to pay.
These costs may include homeowners association fees (if applicable), water and trash, gardening, utilities, or your annual homeowners insurance premium.
If you plan to cover the cost of these items, you may want to increase your monthly rental amount to avoid paying for them out of pocket.
HOW CAN I KEEP MY RENTAL PROPERTY SAFE FOR TENANTS?
Taking the necessary steps to keep your rental property safe is not only beneficial to your tenants, it also protects you as a landlord.
If your rental property is not up to safety standards, you could find yourself in legal trouble and even lose rental income.
To protect yourself and your tenants, keep your property safe by taking preventative measures and following basic safety tips, including:
- Be sure to shovel and salt sidewalks and walkways in winter as needed.
- Replace smoke detector batteries and test them at least twice a year.
- Clean gutters regularly and direct downspouts away from sidewalks.
- Keep an eye on the water temperature and set the water heater to 120 degrees Fahrenheit (49 degrees Celsius) or lower to avoid scalding.
- Have a licensed contractor inspect your heating and air conditioning units.
- Clean chimneys to prevent creosote buildup.
- Check the condition of the roof at least once a year to ensure quick repair of leaks or holes.
- Confirm that all electrical wiring is good at least once a year and update as necessary.
- Have at least one carbon monoxide detector in your home and replace the batteries once a year.
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DO I HAVE TO PRE-SCREEN MY TENANTS?
You may be required to do background checks and gather references during the application process.
It’s also smart to contact past apartments and rental houses to see if there were any property incidents or other alerts.
DO I NEED TO ASK MY TENANTS TO HAVE RENTERS INSURANCE?
Renters insurance * can help better protect you and your renter. Tenants’ personal belongings (furniture, electronics, clothing, etc.) are usually not covered by a landlord’s policy.
However, belongings are generally covered—up to the limits set by a policy—by renters insurance. Renters insurance policies also often include liability protection.
Some states, however, do not allow renters insurance to be a requirement. Check your state laws for any restrictions.
WHAT TYPE OF DOCUMENTATION DO I NEED FOR THE RENTAL AGREEMENT?
First of all, always have everything in writing. Your rental agreement should specify exactly what each party is responsible for in terms of payment and maintenance.
Also, be sure to include guidelines around situations that involve breaking the lease or if you need to sell the property while it’s still rented.
Check out our list of rental agreement templates * to get started, including rental applications, move-in forms, and maintenance checklists.
WHAT SHOULD I DO ONCE MY TENANTS HAVE MOVED OUT?
It is important to check from time to time to make sure there are no maintenance issues and that your property is being properly cared for.
Good owners respond to repair requests quickly and perform regular maintenance to prevent serious problems.
Asking neighbors is also a good way to make sure there aren’t any big problems with your tenants or the property.
HOW SHOULD I DEAL WITH DIFFICULT TENANTS?
While every landlord expects great tenants, situations sometimes arise involving late rent payments, neighbor complaints, or property damage.
To keep you on top of these issues, he visits the property regularly (but notifies the tenant) and talks to neighbors to assess the situation.
To protect yourself against future tenant problems, be sure to keep proper records of communication, maintenance visits, and financial transactions.
Make sure all the rules are clearly written in the lease so the tenant is aware of the property’s rules and regulations before they move in.
When problems arise with difficult tenants, be sure to communicate your concerns clearly and give them warnings where applicable.
If the issue is late or nonpayment of rent, according to the guidelines set forth in your lease, you may be able to evict the tenant after a certain period of time.
Of course, check local regulations before taking any action.
Reacting appropriately to problematic situations is important, but it’s best to do your due diligence to avoid difficult tenants generally.
Before signing a lease, run a background check to determine credit, employment, criminal, and rental history.
ARE ANY OF MY RENTAL COSTS PROPERTY TAX DEDUCTIBLE?
Repairs, taxes, mortgage interest and insurance are generally tax deductible, according to Zillow.
Make sure any money you spend on your rental property is documented, whether it’s repairs, upgrades or purchases. To find out exactly what expenses you can write off, contact your tax professional.
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WHEN CAN I EVICT A TENANT?
Each state is different and has unique rules for eviction procedures and documents. Common reasons for evictions are:
- Failure to pay rent
- Violation of the rental agreement
- damaged property
- Use of assets for illegal activities
In many states, before you can evict a tenant, you must give notice of minor violations. This notice asks the tenant to correct the problem or vacate the property.
Depending on the reason for the attempted eviction and the state you are in, you are required to give a certain amount of notice in advance. Make sure you get a copy of your state’s eviction rules.
