26 Tips for Landlords from the Pros

If you’re looking for landlord advice, you’ve come to the right place. We have put together a list of the most important tips for landlords from experienced professionals all over the country. Being a new investor comes with its sets of challenges, but it’s also an excellent way to build wealth.

Here are 26 tips for landlords from the pros:

1. Use Property Management Software

Ryan Coon, Landlord, Avail

One lost repair receipt can be one less tax deduction and one misplaced lease can cost you months in eviction court. Using technology can help landlords streamline necessary tasks like listing their property, screening tenants, signing leases, collecting payments and handling maintenance requests. The last thing a busy landlord needs is to be bogged down with excel spreadsheets and hard copy documents, wasting time and potentially money.

For more information regarding property management software, you can read our guide on the best property management software, including our number one recommendation.

2. Require Tenants to have Renters Insurance

David Lecko, Landlord, Dealmachineapp.com

Requiring tenants to have renters insurance is often overlooked by landlords. What if your tenant does more damage than the security deposit covers? For example, the tenant leaves the stove on or floods the dwelling by leaving on the sink. Your landlord insurance may or may not cover the cost of the damage, but compensation can be sought through your tenant’s liability coverage. Your tenants will also benefit by protecting themselves with policies that cover losses to their personal belongings.

Read the Fit Small Business ultimate guide on landlord insurance for more information.

3. Set up the Property as an LLC

Sarnen Steinbarth, Landlord and CEO, Turbo Tenant

It’s highly beneficial to set up LLC’s for each rental property to help protect yourself in the case of a lawsuit. An LLC can be used to shield your personal assets from possible rental property-related litigation such as a slip and fall. LLCs also offer tax advantages such as pass-through taxation.

Read the Fit Small Business ultimate guide on business structures like LLC’s, S corp, and more.

4. Document Your Property’s Condition

Andrew Shedlock, Litigation Attorney, Kutak Rock

Take pictures and a video of the property before renters move. Do the exact same thing when tenants move out and compare the two for damages. Document (and keep receipts) of all repairs you had to do because of tenants’ wrongdoing. Have clear records of invoices, receipts and job descriptions. This is the easiest way to head off a challenge from tenants when you have to defend against claims that you’re wrongfully withholding security deposits.

For more information on how to properly document your rental property’s condition, you can read our landlord checklist ultimate guide.

5. Keep Security Deposits Separate

Brian Pendergraft, Lawyer, The Pendergraft Firm

Although municipalities have different regulations regarding what to do with tenants’ security deposits, it’s important to keep them separate from rents received. Some treat the money like it is their own, but it’s actually the tenant’s money. In many jurisdictions, landlords are liable for treble damages and attorney’s fees if they misuse the deposit.

Read our article on free small business checking accounts to find the best business account to use for your landlord business transactions.

6. Get Repairs Done Promptly

Shaolaine Loving, Attorney, Loving Law LTD

By attending to repairs in a prompt manner it saves your property from more damage occurring, which saves you money. It also prevents the landlord from having the tenant claim remedies under the law. If you fix a leak before it worsens, mold won’t have time to spread and the leak won’t damage other parts of the property. On-time repairs also let the tenant know that you’re serious about taking care of your property and they should be too.

7. Learn to Make Money with Vacation Rentals

Marc Prosser, Co-founder, Fit Small Business

Many vacationers are opting for alternatives to hotels. They want to experience the city and live like locals do for the duration of their stay. It’s a great opportunity to furnish your rental property and rent it out to short-term tenants. You can charge higher rents since it’s a furnished, short-term property. You will also have the flexibility of being able to enjoy the property yourself when tenants aren’t in it.

8. Schedule Regular Property Inspections

By scheduling regular property inspections you can keep a closer eye on your property. If you notice an issue during an inspection it can be addressed right away which will save you money in the long run. When doing an inspection, keep it casual with the tenant, so as not to alarm them or make them feel like their privacy is being invaded. Always provide the tenant with a 24 hour written notice before conducting a property inspection.

9. Add a Pet Clause to Your Rental Agreement

Pets are members of the family for many renters. However, if you’re going to allow them in your property you need to have a strict pet clause as part of your rental agreement. The clause needs to indicate how much the pet deposit is, if it’s refundable and if an additional monthly pet rent will be charged. It should also clearly define what types of pets are acceptable and if there are any breed restrictions, including what the pet owner might be liable for.

10. Consider a Turnkey Investment Property

Emile L’Eplattenier, Real Estate Sales Analyst, Fit Small Business

A turnkey property is typically an investment property that’s been rehabbed and seasoned with tenants by a turnkey property company. If you’re looking for a passive real estate investment without much time investment, a turnkey property not only has existing tenants and updated amenities, but the property is also managed by the turnkey property company itself.

11. Have a Network of Reliable Contractors

Platforms like Home Advisor offer cost-effective places to find licensed contractors online. They provide reviews of the contractors and you can read about their ratings and experience levels. Having a network of reliable contractors to call on in case of repairs is essential. It will ensure that your repairs will be made in a timely manner thus keeping your property in good condition and keeping the tenant satisfied.

12. Require Renters Insurance

Zumper Staff, Zumper

As a landlord, you likely have insurance that covers the apartment or housing complex, but did you know that leaves your tenants’ belongings vulnerable? Break-ins, fires, and damage are all possibilities, and tenants will bear the financial burden of replacing bikes, electronics, and furniture. Avoid the sticky situation of dealing with upset tenants by requiring them to purchase renters insurance. Each insurance policy is different, and specific coverage may be needed for earthquakes, flooding, and other natural disasters. Encourage your tenants to purchase the appropriate policy; they’ll thank you when they get that big screen tv replaced for free.

13. Screen Tenants Thoroughly

Domenick Tiziano, Landlord, AccidentalRental.com

Tenant screening can often be overlooked during a tenant turnover. Many landlords don’t realize the true cost of tenant turnover which is likely their biggest expense right after mortgage interest and property taxes. Inexperienced landlords panic when they receive a lease termination notice and they rush to get any tenant in place instead of a qualified tenant. Little tricks like having a 60-day notice clause in all of your leases and having a re-keyable lock system for all of your apartments can save money on turnover costs.

Read the Fit Small Business buyer’s guide on the best tenant screening services.

14. Use Part of Your Investment Property Loan as a Reserve Fund

Priyanka Prakash, Managing Editor, Fit Small Business

Investors commonly finance investment properties and plan for the down payment, financing costs and the operating costs and repairs. However, they often forget about setting up a reserve fund. This money should be set aside in the beginning, as if it was required. This will be beneficial when emergencies happen, unanticipated repairs pop up and when longer than expected vacancies occur.

15. Take Advice from Experienced Landlords

Just as you hire an attorney to represent you in court and an accountant to do your taxes, take rental advice from other landlords. Join an investment group, be part of a forum, and meet like-minded individuals and learn from their mistakes. Besides landlord tips, you may also learn more about how to invest in real estate which will increase your investment portfolio and your potential profits.

16. Consider Cash for Keys Instead of an Eviction

Ian Atkins, Real Estate Finance Editor, Fit Small Business

Cash for keys is a faster alternative to an eviction if the tenant agrees to it. It’s a private agreement between the landlord and the tenant. The landlord agrees to pay the tenant to vacate the property and return the keys. Landlords do this to avoid the often time consuming legal process of filing an eviction with the court which can take months.

17. Don’t Rent to Family or Friends

Don’t mix family and friends with your investment property business. No matter how wonderful it may be in the beginning, those close to you will expect more for less when renting from you. If the friend can’t afford to pay rent one month, it now eats into your cash flow and puts you in an awkward predicament. Let them know it’s nothing personal, it’s just your policy to never rent to family or friends.

18. Use Small Business Accounting Software

Crystalynn Shelton, Accounting Writer, Fit Small Business

Taxes and the IRS should be taken seriously and using accounting software will keep you organized and up to date with your business activities. For example, a hired CPA will be able to use this software tell you what tax deductions can be made and how to depreciate the rental property over time. Accounting software can also generate profit and loss statements in minutes.

19. Work with a Real Estate Attorney

Nicole Daniels, Real Estate Attorney, Dinsmore

Work with an attorney who specializes in real estate so they’re familiar with the law. They can help you draft a lease, keep you upto date on zoning ordinances, housing code and guide you through the eviction process. In terms of evictions, in some states judges require strict compliance with the statutes. The demand notice must include the proper language and be served correctly or the judge won’t take your case any further. Look closely at the notice requirements

20. Take Out Landlord Insurance

Jeff White, Real Estate & Small Business Writer, Fit Small Business

Having the proper landlord insurance is essential for all real estate investors.This insurance helps to protect your investment from the expense of lawsuits and/or property damage. Landlord insurance should cover the structure, as well as lost rental income and personal injury occurring on or around the property. The policy differs from the policy on a primary residence since the investment property is a business.

21. Know the Local Real Estate Laws

Mike Mcelroy, Landlord and Founder, Center Coast Realty

As a landlord, it’s important to know local laws and regulations. In Chicago, for example, there are numerous often-overlooked hoops a landlord must jump through in order to avoid stiff civil penalties. For example, failing to list the address of the actual brick and mortar bank in which you deposit the security deposit allows the tenant to break the lease, penalty-free, and easily sue you.

22. Invest in an Apartment Building

Evan Tarver, Real Estate Analyst, Fit Small Business

By investing in an apartment building, you have the space for extra money-making opportunities. Installing a cell tower or a billboard on an unused section of the property provides extra rental income and doesn’t infringe on the tenant’s use of the property. Installing coin-operated laundry machines and vending machines can be another way to bring in extra income.

23. Choose Renovations that Increase the Rent

Quality renovations will lead to rent increases and more quality tenants. Use the same interior paint color for each property. This makes it easier when doing touch up paint and saves you the time and money of multiple hardware store trips to match paint colors. Besides paint, landlords should focus on clean, durable flooring which is a renovation that can increase the rent. It’s also one of the first things that tenants look for and it can make an apartment feel modern and clean.

24. Have the Right Financing in Place for Upgrades

Upgrades to a rental property can bring added value to the property in the long run. They can also increase the rent and encourage the tenant to stay in the property longer, which helps prevent a high vacancy rate. VISIO offers refinancing options, bridge loans and rental property loans with competitive rates. They usually fund a loan within 21 days.

Visit VISIO

25. Take Advantage of Investment Property Deductions

David Waring, Editor-In-Chief, Fit Small Business

Rental properties provide a good opportunity for investors to take advantage of tax benefits and deductions. Rental property owners can write-off such things as mortgage interest, loan fees, utilities, maintenance, and more. In fact, even credit card interest assessed on property purchases can be deducted, all of which reduces your annual tax burden and saves you money.

26. Treat Being a Landlord Like a Business

Owning investment properties isn’t a hobby. It’s fine to have empathy, but sob stories don’t pay the bills. Rent is your income and everything else, such as property management fees, repairs and taxes are all your expenses. If you treat being a landlord like a business from the beginning, it will be easier to separate your emotions from the business’ goals.

Bottom Line

Being a real estate investor is a business and it can be a lucrative one. Keep this landlord advice in mind. By treating it like a business, being organized and knowing the local and state laws, you’re on your way to having a successful long-term investing strategy.