Thing to Consider When Purchasing Property to Rent
Rental Real Estate Realities
Your rental property is a business so you have to invest your time and money into making it successful. Before investing in a rental property, face these realities. Are you prepared to:
- Devote time and hard work to manage your business such as attracting and retaining tenants?
- Deal with difficult tenants who may make late payments, stop paying rent and complain about “every little thing” that needs attention?
- Follow state, local, and federal laws, building codes, sanitary codes and other regulations regarding landlord / tenant relationships?
- Find and work with professionals, such as attorneys or tax preparers, important partners in the success of your business?
- Invest the time and money to make repairs and maintain your property, not only according to minimum legal standards of habitability but also to make your rental property attractive and enjoyable?
Consistent Review of Prospective Tenants
Remember that your rental property is a business so it will take time, money, patience and perseverance to make it successful. Your business will also have to follow the Federal Fair Housing Act (FFHA), which prohibits “any preference, limitation, or discrimination because of race, color, religion, sex, handicap, familial status, or national origin, or intention to make such preference, limitation or discrimination.” Comply with the FFHA by treating all applicants the same and requiring them to complete a standard application form, which should include:
- Prospective tenant’s address, phone number, and Social Security number
- Length of time the applicant has lived at current address
- Names and telephone numbers of current and past landlords
- Address and phone number of the applicant’s employer
- Whether the prospective tenant is a member of the armed or uniformed services, either active or reserve
- Names of personal and credit references
- Applicant’s current income and, if necessary, other sources of funds
- Ask each applicant to provide photo identification, such as a driver’s license, green card, or government/military identification card
- At the bottom of the application, have each applicant fill out a statement authorizing you to contact his/her references and check the information provided. Some employers will not verify information if you do not have written authorization.
Choose your tenants carefully! Checking out a prospective tenant prior to signing a lease can save you a lot of time, money and aggravation later on.
- Verify all references provided by a prospective tenant by personally calling them
- Run a background check on the prospective tenant
- Run a credit check on the prospective tenant
- Search for previous evictions and any other evidence of problems, such as non-payment or late payment of rent or complaints from neighbors