What Is Needed To Rent Out Property?

Question

Nathan Gesner · Answer

You absolutely need some things.

1. A way to screen tenants;

2. You need to understand how to translate the screening results and determine if they are qualified

3. A written agreement that complies with federal, state, and local law

4. Lease agreement should cover the majority of Landlord-Tenant issues

5. Policies and procedures in place to deal with lease violations

6. Business mind-set to ensure you can handle problems without getting emotionally involved.

Those are just a few starters. The easiest solution is to hire a property manager until you gain some knowledge and experience and can try handling this on your own. However, hiring a property manager also takes some effort and you should never grab the first person in the phone book or the one with the lowest fees.

You can start by going to www.narpm.org and search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees.  Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addendums. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance or problem tenants. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

I hope this basic guide helps. If you have specific questions about property management, I'll be happy to help!

Jim K. · Answer

Just agree on the rent, shake on it, they move it with their stuff, everything is copacetic. What could go wrong?

Katie Stewart · Answer

Hi Miguel! Nathan G. definitely covered the basics of beginning your investing journey. I don't think that you necessarily need to hire a property manager, instead take advantage of all the free landlord software that is out there. Most software can provide you with online applications and screenings as well as market syndication so your property is posted to all of the major listing sites (i.e. realtor.com, apartments.com, Zillow, etc.). If you need any recommendations on software, please feel free to reach out to me directly through personal message!

As Nathan mentioned, I would make sure you have created a rental criteria that outlines income and credit requirements as well as how you will treat those with a criminal background or eviction history. Then, I would create a state-specific lease with addendums that cover major issues such as maintenance, pest control, pets, rent payments and so on.

In addition, I would strongly recommend requiring renter's insurance for your tenants. Without renter's insurance you’re putting yourself, your rental, and your savings at risk. Requiring renters insurance protects you from expensive renter accidents, injuries that occur on your rental property, and costly lawsuits that can easily pop up in the landlord business. The student housing community I worked for required all tenants to have a minimum of 100K liability and you'd be surprised at how many times we had to use their policy for some sort of damage to the property (i.e. flooding, fires, etc.).

As far as rent payments, I would recommend using Venmo. Most people have the app nowadays and it's extremely convenient to transfer the funds into your bank account.

Hope this helps!

Mike Stohler · Answer

Miguel,

Nathan nailed it.  Your paperwork must be thorough and protect you.  Nothing can be assumed.  If it's not in the paperwork it doesn't exist.  Spell out all the expectations.  I do this by having a standard state legal lease with addendums that I need for my own protection.  Details of who is responsible for what.  If you currently have a job, get a PM.  Managing units is a full-time job.

Good luck

Rachel H. · Answer

@Miguel B. Everyone has a different way of doing things. Some landlords I've known have verbal agreements while others prefer to do things in writing. It's up to you how you want to handle things. Personally, I prefer to treat it just like property managers do. Agreements are in writing. Regarding hiring a property manager, it's completely up to you whether or not to hire one or manage the property yourself. Good luck!

Dick Stevens · Answer

You need money.

What Is Needed To Rent Out Property?

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