The need for Rental Properties is on the rise in SW and Central Florida and many are jumping in with both feet. Problem? They are making Newbie mistakes. Mistakes that are easy to avoid with a bit of thought and lots of preparation.
Not Knowing the Local Laws:
There are very specific laws governing Landlord-Tenant relationships. These laws vary from state to state, county to county , even city to city. In many counties, there are Apartment Owner groups. If not, there is plenty of information online or at your library.
One example is the timeline a deposit is to be returned when a tenant vacates the property. Laws that dictate written communication between landlords and tenants concerning late notices. A few minutes researching these laws can save you lots of time and money when the tenant moves.
But it is my friend’s daughter renting the apartment –
Your prospective tenant can be your best friend, a friend of a friend or even a family member. Just because you are told they are a great renter does not make it true. A background check and a credit check should be done for all prospective tenants. I have known family members who do not have an inkling about their sibling’s poor payment record or even evictions.
There are several online credit report applications for landlords. Some even cost below $50 per applicant. By the way, ALL prospective tenants should have background checks.
What is a reserve and why do I need one?
Many Landlords do not estimate their expenses properly. The lawn, the pool company and even bug control are the norm. But many landlords forget regular maintenance and repair from wear-and-tear. There are replacement costs and always unexpected repairs.
A reserve or extra funds for emergencies should be set aside each month from the rent to cover these unexpected expenditures. A Landlord needs to estimate these expenses and put them aside from the collected rents. Also, only plan your expense reserve based on 10 or eleven months rent. There may be a month or two the property sits empty between tenants. Just because the income stops, does not mean the expenses stop.
Renters’ Insurance for everyone.
This should be a no-brainer but one part is overlooked many times. The apartment and tenants are always covered. What is forgotten most often – the tenant’s belongings. The landlord may be responsible if a leak, for instance, ruins the tenant’s furniture.
In some states, a landlord can demand the Tenant to carry Renters’ Insurance. Check your state and local laws. Always protect “your stuff” and “their stuff”.
If you are unsure of your local laws, check with the local Housing Authority, the Library or the Board of Realtors. Many times, books on Landlord-Tenant Laws are available.
Broker/Owner, Investment Property Consultant
Real Estate Services of SWFL, LLC
Real Estate Services of Citrus County, LLC