New landlord liability advice

[Jacob Stan]

Hello,

I will be purchasing my first multi family property sometime this year.

The one thing that has been holding me back is the liability associated with being a landlord. I plan to potentially hire a property management company to handle day to day issues and for acquiring tenants, but I still would like some advice on what to expect legally.

Of course I plan to maintain the properties well, but I still would like a heads up on how to protect myself and my investments. I’ve already spoken to a few landlords and read a few forums, but it seems that not everyone agrees on everything.

Could you please suggest any books or articles on what to expect and how to approach my first investment wisely? Id like to review my options on my own and consider what would be best for me.

I’m also open to all advice that you have to share with a new investor.

Thank You!

[Derek Felch]

My encouragement would be to not let fear hold you back.  In reality, you are creating a liability for yourself with lots of things you do every day.  I seem to remember reading here on a blog post years ago that if you are a landlord, expect to be sued.  That warmed my risk adverse heart so much, I can still remember it to this day!

That being said, you can't eliminate risks, but you can take steps to minimize them.  Here's a few suggestions...

Have a good lease and always follow it.  If you make changes with a tenant, add an addendum.

Take the time to do a move in and move out inspection, and take pictures/video of the property.

Pay attention to safety issues in your property.  Don't assume anyone else is going to look out for you.  Make sure you have smoke detectors and carbon monoxide detectors.  Don't try and take shortcuts in life safety issues.

Carry an umbrella liability policy.  This will kick in if you go above your liability limits on your landlord policy.  And, you can always raise those liability amounts too.

You can also consider putting your property in an LLC, particularly if they are not encumbered by a mortgage.

Again, don't let the fear of liability be the thing holding you back.  Take steps to protect yourself and your assets, but most importantly go get that multifamily property you want!