Owning rental property is a great opportunity – not only the experience, but also as a means to extract a sizable profit.
However, the profit margin a landlord can expect is dependent on many factors – many of which we discuss below. Landlords should consider, among other things, the state of the property, the market rent, tenant quality, and the obligations that come with being a landlord.
Landlords must also consider the legal architecture around lease agreements. These can often be complex and, if misinterpreted, can result in considerable expense on behalf of the landlord. We’ll go through some of these legal implications below.
In this section, we go through some of the best tips for landlords renting their property – tips that landlords should really take on board before deciding whether or not to rent.
Tip #1 – Check the state of the property
Landlords are obliged, by law, to offer prospective tenants a home that meets certain minimum living standards.
What are these minimum living standards, you ask?
Well, it deals with everything from ensuring a safe and consistent water supply, electricity supply, gas and piping network, and overall structural integrity of the property. It also encompasses heating, ventilation, appliances, and the property’s safety standards.
Landlords may need to renovate their property to ensure it meets these standards. Failure to do so may result in the landlord failing to acquire the requisite license to rent their property. If unsure, always check with the relevant authority for more information.
Tip #2 – Tenant quality
Tenants are the agents of income for each property. By failing to acquire the very best tenants, it compromises the landlord’s ability to acquire the maximum possible income.
This is because bad tenants – which include tenants who are unable to pay their rent – act as a future bulwark against income potential. It not only means removing that unsavory tenant, but also to invest the time and effort in finding new, quality tenants.
Don’t have the time? Fear not, as property management companies are equipped with the tools to find the very best tenants – by checking everything from previous landlord and employer references, to income verification and overall suitability to the tenancy.
If you’ve decided to interview the prospective tenant, always keep in mind that landlords are not permitted to discriminate on any grounds.
Tip #3 – Drafting the lease
The next of our top tips for landlords renting their property is how to draft the lease.
What do we mean?
Well, think about it. Tenants living in the property can do just about anything. You need to ensure that all property – including appliances and furniture etc. – are correctly listed, and that you take a photo of each part of the property.
This means that tenants are not in a position to challenge the lease. When they sign the lease, they make a legal commitment not to damage any of the items listed and – with photographic evidence to back the structural claim – tenants won’t be able to avail of their deposit.
The deposit is usually one month’s rent. Always be sure that the rent you charge is in-line with existing market rents. Charging exorbitant fees above and beyond the standard market rent for your property is not permitted.
Tip #4 – Meet your obligations
Landlords are required to meet certain obligations both to the tenant and to the property.
These obligations include, but are not limited, to:
- Maintaining the structural integrity of the property
- Providing tenants with adequate notice of rent reviews
- Reimburse tenants with their deposit at the end of the tenancy (assuming no damage)
- Not exceeding the market rent for a property of that type, size, and location
- Repairing the interior of the property, when required
Landlords who don’t meet these obligations are actively breaking terms in the lease agreement – as landlords are, by statute, those in a position to meet these terms. Landlords unsure of their obligations should consult their local authority on the matter.
Tip #5 – Know your rights
Landlords have right as well as responsibilities. Landlords should be fully aware of their rights and what they are entitled to do during, and at the termination of, the lease agreement. Landlords should be in a position to enforce these rights without disturbance from the tenant.
- Receiving rent at the due date
- Visiting the property to ensure it remains in a clean and viable state
- Understanding how to properly terminate a lease
This last point is particularly important. Landlords must evict tenants according to defined, standard procedures. Landlords cannot, for example, enter the property and forcibly remove the tenant – and their possessions – from the property.
That’s about it for our top tips for landlords renting their property. By keeping to these simple tips, aspiring landlords will be better placed to understand not only their obligations toward the property, but also how to best extract the most revenue from their investment.