Property is typically a great investment, especially if you’ve saved to purchase a second one to generate an income. Once you make this investment, you still need to decide if you will manage the rental or give it to an agent to manage.
Most homeowners want to save on rental agent costs and manage their own rental. If you decide to take care of the legalities yourself, there are several guidelines that will help make your new investment a success.
Vetting prospective tenants
Always do a thorough inspection of prospective tenants. It’s easy to be trusting and make assumptions that they will treat your property as well as you do, but this is not always the case. Unwary landlords have leased their property in good faith and sat with horrific bills for repairs because of vandalism.
Not everyone is as respectful as you are. Get payslips, call employers, and importantly, get the numbers of previous landlords to find out how reliable your prospective tenants are. Always safeguard your own interests by doing the leg work as this is the only way to protect yourself from loss.
Legal documentation
Get prospective tenants to complete comprehensive forms related to their previous addresses, family contact numbers and employer details and banking details. With this information in place, you can always sue them if they leave without paying or damage your property.
Most importantly, you will need a solid lease agreement to be signed. Lease agreements cover your interests and that of the tenants should something go wrong. Net Lawman provides a list of related contracts that will help you solve the problem of paperwork.
They also offer legal advice should you find that you need to make changes to basic contracts, together with providing a proofreading service. All of these services will help you stay on track when renting out your property.
Get a deposit
A deposit can be equal to one or two months’ worth of rent. Your lease agreement should stipulate the correct figure, which should be paid into your bank account before the tenant moves into your property. Always pay the deposit into a separate trust account which attracts interest. You will need to refund the full amount and interest once the lease ends, and there are no deductions for damages.
Include details in the lease about how the rent is to be paid every month. Typically, tenants are given a grace period of seven days from the due date to pay the full amount. Stipulate what action will be taken if this is not done.
Property defects
After all the paperwork has been signed, do a walkthrough of the property with the tenant. At this time, it is best to take a video of the inside and exterior of the property. A video will give you proof of the condition of the premises. If any damage is done, you will have solid proof of the condition of the property.
Note any defects and fix these if this has not already been taken care of. Ideally, all defects should be fixed prior to the tenant taking up residence. This is another way to protect you against any disputes.
Property inspection
To keep things running smoothly, arrange with the tenant to conduct a monthly inspection of the property. You’ll want to do this to make sure that they are meeting their side of the legal contract and treating your property with care.
This is a preventive measure to ensure that if damage has been done, that it won’t make a significant impact on your income if the tenant disappears. Always secure your property as much as possible and disclose any possible environmental or other problems to the tenant.