5 Tips and Tricks for First-Time Landlords
Real estate is one of the most secure investments and with excellent long-term perspectives. It can be surpassed maybe only by state-issued bonds, but the return rate is undoubtedly higher. As a first-time landlord, you should learn about this business and know what to expect and how to hedge risks. The best way is to learn from the mistakes of others. Here is a list of useful tips from a real-estate broker to make your life and that of your tenants easier.
Rent collection is the priority
Start by putting in place a written legally binding agreement between you and your tenants. Be sure you have their contact details, as well as some background information about their previous history or alternative offices. This is useful when they stop paying rent or return your calls. You don’t need to be aggressive, just stand your ground and don’t let emotions rule your decisions.
Select your tenants
It’s not discrimination to set up some rules for the people you want to do business with. Learn from banks and ask for a copy of their credit report and some references from previous landlords, if available. It is not intrusive, it’ just protecting your investment. Some landlords even ask for personal credit scores for small business owners to evaluate their ability to pay.
Set high standards and stick to them
Before handing over the first set of keys, make sure you have available a clear policy that you have already included in your contract. Make a short version of this and stick it in a visible place. Don’t make rules as you go if you don’t intend to have long debates with tenants. Just have it in writing and make them sign it.
Include in the policy of your rental business all the details related to your obligations as well, not only theirs. Be polite, but firm in your terms. For example, let them know you have office hours, and all other communication goes to the voicemail. Also, let them know how fast you will fix an emergency if the situation arises and stick to your promise.
You are a landlord, not a plumber/electrician/maid mix. Consider yourself an investor or a business manager. While some easy fixes you can perform yourself, to avoid the unwanted situation of fixing toilets at 2 AM, be sure you make a partnership with relevant maintenance services that are available 24/7. Of course, this could come at a higher cost than DIY, but it could also mean more time for you and your business.
Think outside the box
As a first-time landlord, you will learn that your property is just one way to make money. Commercial buildings can double as advertising venues, cell-phone towers or solar panel farms. Evaluate the storage space you have in basements or lease small spots to coffee vending machines.
Is this your first time as a landlord? Don’t be afraid to ask for help and guidance from our experts in commercial real estate transactions.
Douglas Commercial, LLC is a full service commercial real estate firm offering tenant and landlord advisory services. Visit www.douglascommercial.com for more information.