Are you a first-time property owner/landlord? Becoming a property owner/landlord can feel daunting, but we’ve broken down the three areas you should focus on if you’re new to the real estate game.
One of the first things you think about after becoming a landlord is finding an ideal tenant for your property; however, that isn’t an easy job. There are multiple things you should evaluate when considering whether or not to rent your property to a potential tenant.
- Background check
Past rental history
There are multiple companies that provide services to assist you with gathering, processing, and reviewing this information so you don’t have to worry about taking it on yourself.
- Marketplace ONE Management Pro Tip: Remember that you can only ask questions that don’t infringe on a person’s privacy. Asking questions such as how many children a potential tenant is planning on having or their marital status is considered a violation of the potential tenant’s privacy.
The Property Itself
No matter what type of property you are dealing with, whether it be a home, condo, duplex, or apartment, the same rules apply. For a tenant to be interested, and for you to gain a higher monthly rent for the home, it’s going to need to be two things: curb appeal and functionality.
There’s nothing worse for a prospective tenant than showing up to a property and finding that it looks nothing like the picture and or something in the property is either broken or not functioning properly.
A potential tenant will likely notice:
- The exterior (loose siding, brick, or shingles)
- Dirty/broken windows or doors
- Dated appliances or fixtures
- A potential tenant will likely check:
- Water pressure
- Water damage
- Broken doors (interior doors like bedrooms and closets)
- Heat/AC units
- Carpet for smell or stains
- Holes in walls, doors, or closets
Making sure that the property is in the best condition possible is a great way to put your best foot forward with a potential tenant.
- Marketplace Management Pro Tip: Inviting a friend or family member to tour your property before a potential tenant will provide you insight into what you may have missed. Utilizing honest feedback like that of a friend or family member will give you the knowledge you need without turning off a potential tenant.
When there is a lot going on, it’s easy to miss certain details. While you’re searching for the right tenant, spending time readying the property, you should also keep the following in mind:
- Insurance (tenant rental, homeowner property, and lost rental insurance)
- Pricing (making sure you’re competitive, but not overpricing your property for the value and neighborhood)
- Exterior security (floodlights, cameras, etc.)
- Legal (you may want to consider hiring a legal counsel to look over all of your documents and your first leasing agreement as an added level of protection)
Marketplace Management Pro Tip: Managing a property isn’t for everyone. You may find that while you enjoy the benefits of owning additional property such as supplementary income, homes in multiple locations, and the option to sell for an instant cash boost, being the actual landlord may not be for you. That’s where a property management team comes in. There are many great options available for the landlord that doesn’t want to manage their property anymore so you can continue to reap the benefits with lower stress and personal involvement.
At the end of the day, becoming a landlord is an exciting new opportunity. Whether you’ve accidentally become a landlord or you’re looking to expand your investment portfolio, there are many resources to help you along the way.
Will Dickson is the President at Marketplace Homes, a national brokerage and property management company, and Managing Director for Finance Michigan, Inc., overseeing investments in real estate, commodities trading, banking, and private equity. With previous experience at Walleye Trading Advisors and Citigroup, Will brings a strong analytical and risk management background. He holds a BA in Economics and Philosophy from Kalamazoo College, a Master’s in Accounting from the University of Texas, and studied abroad at the London School of Economics. He is registered as a Certified Public Accountant, holds the Series 3 and 30 licenses, and is a licensed Title Agent in six states. Recognized for his achievements, he was named a DBusiness “30 in their 30’s” honoree. Will resides in metro Detroit with his wife and two young children.