You buy a home, fix it up, and rent it out to someone else. That person pays rent that covers the mortgage while you build equity. Being a landlord seems pretty simple, right? Well, there are a few more details to consider. If you are new to being a landlord, there are a few things you should know about the legal aspect of renting out a home. These things are very important in terms of treating your rental like a business. Investing a bit of time and money on getting it right now will save you a lot of hassle and major expenses down the road. Check out our legal tips for landlords to help you out.
Always, Always, Always get it in Writing
The number one rule for renting a home is to always get it in writing. The days of the handshake agreement are long gone. The single most important thing that you can do is to require the tenant to sign a written lease agreement. This lease agreement should cover all of the important details, including the amount of the rent, when the rent is due, and any rules regarding the property. This allows both the tenant and the landlord to refer to the specific terms of the agreement in the event that there is a dispute.
Charge a Security Deposit
Charging a security deposit shows your tenant that it is important to you to keep the property in good condition. It also motivates the tenant to treat the property well and keep it in good condition so that he doesn’t lose his security deposit. If the tenant damages the property, you can keep part or all of the security deposit to cover the cost of the repairs. Be sure to also document the condition of the home when the tenant moves in so that there is no question of pre-existing damage.
Verify the Tenant’s Financial Status
It’s important to get to know a tenant financially before you allow them to move in. Use a rental application to gather all of the information that you need to run background checks. Just using the rental application isn’t enough, though; you have to actually follow up on that information. Run a credit check and call the employer for verification. You can use a standard Salary Verification Letter to check the applicant’s income. It’s always easier to find another prospective tenant than it is to evict someone a few months down the road.
Understand Your Lease
Before you let a tenant sign the lease, be sure that you understand the terms of the lease and the keywords that are used in it. You need to fully understand what things like rent, utilities, and maintenance mean, as well as who is responsible for all of those things. If you don’t really understand what your lease means, you could end up in small claims court with a legal battle. It also makes it difficult to enforce the lease if you don’t know what it means.
Know Your Rights
Tenants and landlords both have rights, and you need to know yours. You have the right to enter the property for maintenance with notice, and you have the right to evict the tenant if they don’t pay the rent. Get to know the legal process for evicting a tenant in your area so that you are prepared if a problem arises.
If you are a landlord in Phoenix or Scottsdale area, you can benefit from the property management services provided by McMath Realty. We will take care of all the details of being a landlord so that you don’t have to. Call McMath Realty today.