Indianapolis Rehab Property

With the cost of homes on the decline, investing in real estate is starting to look more and more attractive. Whether you decide that you want to purchase rental property upfront, or rent to tenants when your property is having a hard time selling, the most important aspect of landlording is risk. The idea of risk in respect to renting property tends to get a lot of blank looks. As long as you have a sufficient amount of property insurance and you have a contractually binding lease then what’s the problem right?

Being able to understand the answer to that question requires you to shift your way of thinking. Almost all of us have been or will be a renter at some point in life. Whether it’s when you’re in college, working at your first job, while you’re saving up money for a down payment on your first property, or maybe you just moved to a new city, EVERYONE RENTS AT SOME POINT. While you are a renter it sometimes seems like your landlord always has the ball in their court. They chooses the the color of the paint inside your house, what landscaping you’re alllowed to have, how often the lawn gets mowed, and when or if your driveway driveway gets plowed when it snows. When anything in your house breaks or malfunctions, the repairman that your landlord hired shows up and fixes it. If your rent is ever late, even by a day, the landlord is hassling you to get it paid. Worst of all, when it comes time for you to renew your lease, for some reason the rent always seems to go up.

The funny thing is that when the role is reversed and you become the landlord, you slowly start to realize that your tenants hold all the power. Because the tenant is physically occupying your property, they can cause damage to the appliances or put holes in the wall. Their dogs start peeing on the floor leaving stains and the cats claw at the woodwork. If any illegal activity takes place on your property the police can and will seize your property as evidence in their case. Worst of all, the tenant controls the most important aspect of the entire process: the rent check. You need the check so that you can pay back the bank for your mortgage otherwise that payment is coming straight out of your pocket. Should your tenant turn out to be irresponsible and not make rent payments, it can take up to several months to get them evicted, and while you’re going through the eviction process, your mortgage no the property needs to continue to be paid or you run the risk of losing the house. There are a plethora of laws and organizations that specialize in protect tenant rights, however as a landlord, it seems as though you’re always the person at fault.

I hope all that didnt scare you away from what could be one of the wisest investments you ever make. Should you make the decision to becoma a landlord, there are some vital bits of advice that can help mitigate some of the risk involved.

1. Make Sure You Screen Tenants
On your first property you will most likely want to jump at the first potential tenant that shows interest in renting. This is a natural inclination because you want someone in there to help make your mortgage payment. It is essential that you perform a full credit and backgroung check of the prospective tenant, including calling references listed on the application. If anything doesn’t check out, or if something seems fishy, don’t rent to them! There is no time in this business to be nice to people who need a hand or to hand out favors to anyone that comes along. Make sure you’re renting to a qualified person who can afford to pay the rent. Having a house be vacant for a month while searching for the right tenant can save you a lot more in the long run than quickly renting out a house to the wrong tenant.

2. Get help from a lawyer
Spend the money to hire a lawyer who specializes in drafting leases in your state. Don’t hire out of state attorneys as the laws are different from state to state. Paying a little bit now for a rock solid lease can save you tons of money and time later on.

3. Don’t rent to section 8 tenants
This isn’t a hard and fast rule, however if this is your first property as a landlord it may not be a wise move. Section 8 tenants bring with them a whole lot of extra paperwork and may be more time consuming than its worth straight off the bat. You will have to deal with Section 8 employees who are often overworked and underpaid and sometimess less than willing to help you. When you have multiple units with plenty of cash reserves, then you may want to explore rental options with Section 8 tenants which can actually be quite profitable.

4. Obey the Fair Housing Laws
Discrimination on the basis of religion, race, national origin, color, handicap, sex, or familial status is illegal. You must follow all laws pertaining to fair housing to a tee. Classes are available in all states that cover fair housing laws and are well worth taking. Don’t think that people won’t file a discrimination suit against you, it happens and it can be very costly.

5. Avoid any and all situations that seem “fishy”
If something seems off or too good to be true, chances are it probably is. Use your better judgement and question everything the prospective tenant tells you. Once again it pays to err on the side of caution because a bad tenant will cost you a lot more in the long run.

6. Allow Pets in Your Property
Pets are a double edged sword. On one hand they can cause damage to your property, on the other hand they usually say something about the tenant. People that own pets are often more responsible and a pet brings a sense of family values to the house. If a family is in place with Dad, Mom, little Jimmy, and Fido the family dog, chances are you are gonna get your rent paid on time each month. Additionally, since most landlords don’t allow pets, a greater number of applicants will come your way, giving you more to choose from. If you’ve got an applicant where everythign else checks out; they’ve got a steady job, good references, a family, good credit, and a pet, they’re probably your ideal tenant.

7. Have proper insurance
Would you get less coverage on your own house than you need? I didnt think so, so why would you skimp on coverage for your rental property? Make sure you have adequate coverage on your property to ensure that no costly lawsuits against you will be held up in court.

8. Build a Relationship With Your Tenants
First and foremost, you have to respect the tenant’s space. This is their residence and their private property, you only own the structure. If there are ever maintenance issues that need to be taken care of, make sure you respond promptly and get the situation fixed as quickly as possible, your tenants will respect you more if they see that you handle their problems as you would your own. Dont slap late fees or eviction notices because of a single late rent payment. Things happen in life that are out of the control of tenants. Understand that occasionally rent payments may be delayed, dont make an example of a first time occurance, talk to them and find out what the problem is and work around it.

I hope you have a better idea of what it takes to be a landlord in today’s day and age. It can be a very rewarding occupation or side job and can bring a steady cash flow if you treat it as the business it is. One of the smartest investments in life that a person can make is in rental property. Good luck on your forays into the world of landlording, I hope it’s as fun for you as it is for me.