
Welcome to the world of real estate investment! Becoming a landlord is a significant step that comes with a great deal of responsibility, but also potential rewards. Under ideal circumstances as a landlord, you’ll be able to receive a positive cash flow on your property while it’s also appreciating in value. There can also be significant tax advantages.
This guide will walk you through the essential aspects of being a landlord, from understanding the financial implications to managing tenant relationships and maintaining your property.
But there’s a hefty amount of time and energy involved in managing your own rental property. There’s also a significant financial investment involved in purchasing and maintaining a property.
Let the following information guide you in your decision to become a landlord:
1. Remember that you’re operating a business. This means that you’ll need to keep profit in the front of your mind. It’s important to keep detailed records on your income and expenses. Keep those cancelled checks, copies of bills, and receipts.
An inexpensive ledger system is fine for tracking your financials. There are also various spreadsheet programs and dedicated accounting software that are excellent tools.
Consider using a tax accountant, at least at first, to get you set up correctly. Joining a local real estate club can also be of great assistance.
2. You’ll have to pay taxes. Even though you need to pay taxes on the profits, there are also tax advantages available to property owners and landlords. Some of the common deductions include:

· Interest payments on the mortgage
· Advertising to find tenants
· Insurance premiums
· Property taxes
· Repairs and maintenance
· Tax preparation
· Depreciation
3. There are numerous laws concerning housing. There are local codes related to the structure itself. There are also local and state laws related to evictions, the handling of deposits, how much rents can be raised, and many other related issues.
Your local government is likely to have copies of all the applicable laws available for you. The attorney general should have the required information regarding the applicable state laws.
There are also many federal laws that pertain to tenant-landlord relationships. These primarily address discrimination as it relates to renting and advertising practices. Some of the laws are not applicable if the landlord lives at the property or if there are 4 units or less.
Housing specified for senior citizens is also exempt from some requirements.
4. Consult a good attorney. Consulting a good attorney is a critical step for new landlords, offering numerous benefits that can protect their investment and ensure they operate within the bounds of the law. As a new landlord, here’s why you should consider consulting a good attorney.
Understanding Legal Compliance
· Navigating Landlord-Tenant Laws: Landlord-tenant laws can be complex and vary significantly by state and locality. An attorney can provide clear guidance on these laws, helping landlords understand their rights and responsibilities.
· Fair Housing Regulations: Compliance with fair housing laws is crucial to avoid discrimination claims. An attorney can review rental practices and policies to ensure they meet all federal, state, and local anti-discrimination laws.
Lease Agreement Drafting
· Customization of Lease Agreements: While many generic lease agreements are available, a good attorney can help tailor a lease to fit specific needs and ensure all provisions are enforceable and appropriate for the local area.
· Addressing Specific Needs: Every property is unique, and an attorney can incorporate specific rules and clauses that protect the landlord’s property while being fair to tenants, such as clauses related to pets, maintenance responsibilities, or use of property amenities.
Dispute Resolution and Evictions
· Guidance on Disputes: If disputes arise, whether over repairs, rent, or breaches of lease terms, an attorney can offer strategies for resolution or, if necessary, litigation.
· Eviction Processes: Evicting a tenant can be legally complicated and requires following a strict process. An attorney can navigate this process, ensuring that evictions are handled legally and with minimal risk to the landlord.
5. A standard homeowner’s insurance policy will likely not apply. Your regular homeowner’s insurance policy is for owner occupied homes, so you’ll need a policy specific to rentals. You might also require a separate policy if the home is vacant for an extended period of time.

6. Know your responsibilities. As a landlord, you must meet certain requirements. Be sure you’re aware of your state and local laws.
· Your building must comply with the local building codes.
· The property must be kept in livable condition.
· The utilities must be in sanitary and safe working order.
· You must provide functioning smoke detectors.
7. Consider a property management service. For about 10% of the rent, a property management company will find tenants, collect the rent, make repairs (at your cost), and handle nearly every other type of issue. If you’d rather spend your time finding additional rental properties to purchase, a management service can be a good idea.
Becoming a landlord is not to be taken lightly. Though it can be lucrative, it only takes one bad tenant to create a very challenging situation. Go into the business of being a landlord with your eyes open.
Empower Your Portfolio, Become a Landlord!

Comments