If you've been interested in buying real estate for the purpose of creating a rental unit, it's a lucrative way to expand your business ventures. There are a lot of legalities as well as realities when it comes to entrusting a tenant to care for your property like it was their own. It's important to be prepared for any bumps that may come up along the way, and to learn ways to protect your investment. Here are just a few things that you should consider before launching your own property leasing business.
Run A Complete Background Check On Your Tenants
When your property is available for lease, it's time to start going through rental agreement applications. A home leasing agreement can be a simple piece of paper, and the applicant can write whatever he pleases on it. While things may look good on paper, you'll have to be progressive about doing a thorough research to check for inconsistencies and accuracy. Purchase an online background check subscription so that you can use it multiple times for a reasonable monthly rate. Some things that it should scan for include:
- Employment history and contact information
- Income verification
- Past and current legal issues
- Previous addresses and length at those addresses
- Name, address and phone numbers for the lessee's references
- Complete credit report and FICO score
- Past bankruptcies if applicable
Once you run the background check, it's time to interview your potential tenants. Choose a tenant who has good rental track record and understands the home lease agreement that you are offering.
Have A Contractor On Standby
When managing one or more rental properties, repairs may be a regular occurrence. Even if you are handy or feel you can manage most minor household repairs, you may not be prepared for large scale issues such as plumbing emergencies or HVAC breakdowns. Hiring a reputable contractor who offers emergency services, can help keep your tenants happy and the property safe.
Keep A Lawyer On Retainer
Even though you've just rented your property out to the sweetest and most responsible tenant, never let your guard down. Destruction of property or a tenant who suddenly decides not to pay their past due rent, can make it impossible to recoup your loss. Having a real estate lawyer on retainer allows you to draw up important legal documents and move forward with legal action if necessary.
Hire An Accountant
While managing a couple of properties may seem simple, it's important to be aware of tax loopholes and avoid IRS audits when you have someone frequently scanning your business finances. Hiring a good accountant who specializes in rental property finances and business expenditures is important to have at your fingertips. You can set up affordable consulting terms that will help you easily keep track of your cashflow and tax responsibilities throughout the year.
Starting your own home leasing company is an exciting adventure. Reap the profits by making sure your business is being conducted properly.