Steps to Protect Your Rental Property
As a landlord or owner of a rental property, you are responsible for ensuring that your guests or tenants have a safe and comfortable place to live when they rent your property. You also must make sure that your tenants keep your property in excellent condition and do not cause any damage to it.
In an ideal world, everything should work perfectly. However, like all other ventures, having a rental property involves many risks.
Your tenants may fail to pay you consistently, refuse to leave your property when their lease ends, or they might violate your lease terms. Furthermore, you would be held liable if any injuries occurred on your property, regardless of whose fault it might have been.
There is also the risk of your tenant decreasing your property’s value because of various damages they may have made during their stay. Therefore, it is vital to put measures in place to protect your rental property before putting it up for lease. Here are a few steps to help you protect your rental property.
Insure Your Rental Property
Your rental property is a vital investment, so it needs more than a basic homeowners insurance plan for protection. Liabilities incurred by your tenants are not covered under homeowners insurance. Rental property insurance is specifically designed to address the risks you might encounter as a landlord, including damages, loss of rental income, and other liability costs.
No matter the purpose of your rental property, it is essential that you protect it against the financial risks that come with having tenants living on your property.
The type of rental property insurance should depend on how often you plan on renting your property and the length of your tenants’ stay. Be sure to speak with an insurance expert to help you make the right choice. Read all the terms and conditions to know your limitations so that you don’t find yourself in situations where you are underinsured.
Screen Your Tenants
Almost every landlord has had some experience with a bad tenant. These situations occur too frequently, and they can be avoided if landlords thoroughly screen all applicants. Landlords, especially those who have been in the business for a long period, may trust their gut instinct. But your instincts cannot always predict your tenant’s behavior.
It’s very easy to see why most landlords ignore tenant screening. Any day spent without filling your rental space is a loss, which encourages landlords to go with any tenant they find. However, you might incur further losses if you fail to do so.
You must note a few things during the screening process before making your final decision. One of the first things you must check is the potential tenant’s current financial situation. Ensure that you read your potential tenant’s report and not just know their credit score. They might have a good credit score, but you want more details to determine whether someone can pay rent on time.
Prepare Your Home for Emergencies
Emergencies happen with very little warning, leaving you little time to find a solution. As a landlord, you are also responsible for the safety of your tenants if something like a fire occurs.
It would be best to have a solid evacuation plan to educate your tenants on. You must also prepare for situations like power outages by providing your tenants with a generator and flashlights. Ensure that your home has gone through all fire safety checks and is equipped with a fire extinguisher.
Install a Security System
One of your major duties as a landlord is securing your property. A security system could be a determining factor for a tenant looking to rent your property. Tenants that care about how secure a property is are more likely to be careful, and as a landlord, these are the tenants you should advertise your home too.
An excellent security system will protect the value of your home and protect you against unexpected costs. Plus, it makes you come across as a responsible landlord. If you have multiple rental properties, your tenants are more likely to recommend you to other people.
Installing a top-notch security system in your home might set you back a couple of dollars. Nonetheless, it is a wise investment that will increase the long-term value of your rental property. It can also decrease the cost of your insurance!
Document Everything
As a landlord, you are extremely busy, especially as you have to juggle the responsibilities of your rental property with your full-time job. It can seem impossible to remember all the information you need to regarding safety precautions, yours tenants, etc. You also have to deal with monitoring rent payments and security deposits.
As a landlord, you must keep your documents well organized to run your rental business smoothly. Keeping the right documents and records gives you better protection during legal issues, makes it easier to file your taxes, and promotes better transparency between you and your tenants.
So what documents should you ideally keep on file? You will need to keep your tenants’ rental applications, screening documents, policy agreements, lease or rental agreements, and checklists. You must also document all forms of communication with your tenants.
Final Thoughts
Your rental property is your business, and like every other business, you must identify the risks it comes with and the measures you can put in place to mitigate those risks. These good management steps and practices will protect you, your rental property, and your tenants, so you are better prepared for emergencies.