When you decide to put your home in rentals, you take on liability. You will want to make sure that you are protected legally, in the event that you end up in a legally difficult situation. This post will cover some of the best things that you can do to keep yourself protected when you decide to become a property investor.
It Starts and Ends with the Lease
Your property management bible will be your lease. If there is ever any issue about what pets are allowed, when rent should be paid, how maintenance is performed or anything else dealing with your rental, the first place you should look for an answer is the lease. That is why it is imperative that you write a legally-binding and law-abiding lease. It is strongly recommended that you have a lawyer write it for you or hire a licensed property manager to draft it for you. If you were to ever stand in front of a judge, they would create their judgement based off of your lease.
Keep Insurance Up to Date
One thing that is often forgotten, especially with new landlords is your insurance. When you first put your home in rentals, you should let your bank know and your insurance provider know that you are not living in the house and that you are turning it into a rental property. A rental insurance policy is different from a primary residence property, so make sure you do your research before letting it to a new tenant.
Be a Responsible Landlord
Property management is a two way street. Tenants are expected to hold up their end of the lease, but you as a landlord are also responsible for the property. You need to make sure that the property is in a livable condition and that maintenance is taken care of promptly and correctly. You should also perform routine maintenance on the property to make sure that there are no potential issues before a tenant moves in.
Consider Creating a Business Entity
If you own, or are considering owning, multiple investment properties, you should think about creating an LLC or S-Corp that owns the properties instead of you personally. When you own the properties yourself, you are risking your personal assets if you encounter legal trouble. Since property management and business law is complicated, it’s best to consult an attorney versed in business law to get you set up as an LLC.
Property management can be an incredibly rewarding experience that can create passive income or retirement savings for you with minimal effort. You need to be careful though and make sure that you are doing it correctly, otherwise you could find yourself in legal trouble. Hire the best property managers in the area to take care of your property for you, letting you relax and enjoy passive income!