You have probably noticed that inexperienced investors and first time buyers are snapping up those low priced short sale and foreclosure properties throughout the communities of Westlake Village, Thousand Oaks, Newbury Park, Oak Park and Agoura, and then putting them back on the market for lease and/or lease to buy.
While there are risks involved in being a Landlord, there are some simple steps that you don’t want to miss.
Things to consider:
The Lease Agreement is the most important aspect of maintaining good tenants, who will treat your property with the care and respect, and pay that rent on time. Don’t cheat yourself by using a “cookie cutter” template that you can buy at the drug store. And don’t get a copy of your friends lease and copy it. Either work with a Realtor who can advise you, or review your agreement with an attorney who knows the local laws.
The Lease Application will give you all of the information that you need to make an informed decision. You will want basic information from each person who will live in the property like address, drivers license, date of birth, employment info, social security number and other basic background facts so that you can do a credit and background check. Do they have pets, children, irregular work hour, or criminal background, are also fact that will help you to decide if you want to lease to this person.
Your Leasing Criteria is as important as the applicant’s qualifications. You need to determine exactly what your expectations will be. For example my criteria would be no smokers; no pets; no foreclosures; no bankruptcies; FICO score over 650; two good references; two years on the job and an employment personal referral. It’s not perfect, but it is a place to start. Now, it’s your responsibility to do your due diligence and make those calls to check the references and employment to make sure that it is accurate.
Credit and Background Checks are a must. Don’t wait until you are ready to select an applicant before you select your screening service. If you are working with a Realtor they can most likely refer you to a service, or provide the service in house. In any case, you want to make sure that it is a complete credit report and that it is current 30 days.
Maintaining “Arms Length” Communications with your Tenant is going to make your life as a Landlord, easier and more manageable. You don’t want to position yourself as the owner, but rather the Property Manager.
- Get a separate telephone number with an answer machine/ service You will also want to set up a separate email address
- You will want to have a dedicated Post Office Box to collect rents
You want to allow your Tenant to feel as if they have some control, and that they can get your attention at any time. It will allow you to “manage” your response time and to respond with solutions to their concerns.
Professional Council is a must. Don’t wait until there is a problem or issue concerning taxes, your legal position or your legal options. Select a good CPA and Real Estate Attorney before you purchase your investment property to make sure that you don’t make costly mistakes. Maintain those relationships because you will need to call on them for straight talk and good advice.
Advertising and Marketingyour property through signs, flyers ,local newspaper ads or on-line ads, Craig’s List, etc., the most important thing is to decide on your marketing strategy, and be ready to execute it as soon as the house is ready to go on the market.
Buying an investment property has its risks, but it can have tremendous long term rewards. Put in place systems that will allow you to protect yourself, your privacy and the good maintain of your property at the inception of your investment.