According to a recent study by Renthop.com, July through September is peak rental season. In fact, there’s a 4.5% difference seen between rental rates in July compared to January. Between relocating for school or work, the nice weather encourages countless people are willing to ship off somewhere new.
That means that there’s no better time to invest in the housing market than right now. One of the most popular ways to profit from the rising industry is by becoming a landlord and renting out housing units to qualified tenants.
Though it might seem like the easiest way to make a quick buck, there’s a lot that goes into maintaining a property and serving as a reputable landlord. At the end of the day, you might face more challenges and losses than successes. Here are some of the things that you shouldn’t do as a landlord when you’re thinking about joining this profession.
Don’t forget to copy the lease
The lease is like the code of conduct for tenant living; this contract defines the relationship between tenant and landlord, outlining the dos and don’ts of each party involved. While you might think simply emailing your tenant the lease is more than enough, you need to get a physical copy of the document to cover your bases. After all, 15% of all paper documents get misplaced. That’s why it’s vital to make multiple copies.
This is a safety net, both for the tenant and landlord in question. Leases typically outline the security deposit, terms for eviction, and amenities associated with the living space. This might include parking information, utilities, and the presence of certain appliances. While 90% of Americans regularly enjoy ice cream, having access to a fridge might make or break their choice for an apartment. This aspect of home furnishing might not be in your budget; after all, new appliances can wind up costing you thousands of dollars and that’s before the cost of maintenance and repair. Speaking of which…
Don’t shirk maintenance and repairs
It’s easy for a new landlord to forget the ins and outs of basic home maintenance. While the security deposit typically covers the cost of any repairs and cleaning following the move of a tenant, maintaining the property is a year-round affair.
New landlords might forget that it’s up to them to maintain a habitable environment for their tenants. The term “livable” is often up for debate but any serious issues need to be dealt with in a prompt, efficient manner. That means it’s up to you to repair a broken faucet, clogged drain, or hole in the floor. Luckily, the flooring industry boasted a 3.85% growth within the last year, making flooring options more accessible — and affordable — than ever.
Typically, the repairs and maintenance should be performed as soon as possible, but most states give a 30-day limit on requested repairs. For particularly severe repairs, however, this can be shortened to two days.
If you’re renting a unit in New York, keep in mind that inspection laws have changed. If a tenant signs a lease after June 13, 2019, you’re legally required to allow the tenant to inspect an apartment before they move in. Then, it’s up to you to draft a statement regarding the property’s condition and any repairs that should be made before they move in.
This should go without saying, but discriminating against your potential tenants is not only a terrible thing to do, but it’s also illegal. Under the Fair Housing Act (FHA), landlords are legally prohibited from discriminating against current and potential tenants whether it’s because of sex, gender, race, age, ethnicity, status, religion, or ability. It’s estimated that 36 million Americans alone will experience some form of hearing loss. While it isn’t often talked about, it’s not surprising that discrimination still occurs in the housing industry.
One north Georgia landlord has made headlines after allegedly evicting a white tenant for having black guests visit her home. Victoria Sutton, the tenant in question, has since filed a lawsuit against her landlords Allen and Patricia McCoy.
According to the American Civil Liberties Union lawsuit, the landlords used racial slurs and physically threatened Sutton before evicting her from her home.
“If the allegations of this lawsuit prove true, then it provides a window into the types of pernicious racial discrimination that continues to this day,” notes Sean Young, the legal director for the ACLU of Georgia who is also serving as an attorney on the case.
If you have any inkling of discriminatory behaviors, your best bet is to sell your house and get out of the housing industry altogether.
Don’t forget taxes
When you’re trying to figure out the right price for your unit, you have to account for taxes in your area along with capital gains taxes. While donating your clothing to a charity is tax deductible, there are few housing qualifiers that enable you to claim tax deductions on your rental unit.
Talking with an experienced rental attorney might be your best course of action. They can show you how to draft a lease, work through property taxes, and help you determine which expenses are tax deductible. If you’re not splitting even as a landlord, these deductions can make or break your experience as a landlord.
There are countless dos and don’ts to consider when you become a landlord. While it isn’t always easy to rent out a property, you’ll feel like you’re on top of the world when you find the right tenant. You might not be able to protect the world from the flu, but you can protect your tenants against a bad experience with you. Address these potential pitfalls to ensure that both you and your tenants have an enjoyable time renting this space.