subject: Rental Property Brings Responsibilities [print this page] Today's tough real estate market can open intriguing possibilities. Should you consider buying rental property as an investment? Or does it require too much time and money?
Renting properties can be advantageous: You can get significant tax breaks and, of course, extra income from doing so. But would not be free money. There are some potential disadvantages you should consider before putting money down.
For example, as a rental owner, you would be responsible for all the usual expenses of home ownership, such as mortgages, taxes and insurance. But you would also be responsible for any repairs not caused by the renter. If you don't fix these items, the renter may not have to pay the rent and also cause you other headaches.
Another potential problem is finding a suitable renter. If you don't know him or her well, you should do a background check, including credit history, employment and previous residences. All applications must be worded legally and fairly so it's best to have an attorney look over all contracts.
Make sure rental agreements are clearly worded, listing deposits, rent amounts, due dates etc. Also be sure they spell out when you can inspect the property and how much notice you will give the renter. List what type of maintenance you will do and which must be done by the renter whether you have property in Costa Blanca, Spain or Anchorage, Alaska.
Once you have a renter, be sure to record all payments and all requests for repairs. If the renter is late in paying you, ask calmly when you can expect to receive it. Try to be understanding if there is an acceptable reason but your rental agreement should have provision for collecting late fees.
Be sure to listen if neighbors of your rental property have complaints. If the renter is excessively noisy or otherwise disruptive he or she can cause your property's value to decrease. Be sure to nip potential problems in the bud. However, keep in mind that the neighbor's version may not be the accurate one. Try to consider any situation from both points of view.
Despite your best efforts, occasionally you may have a problem renter: one who is chronically late in paying the rent or causes you significant problems. If you can't solve the problem any other way, try to settle through arbitration rather than through the courts. Arbitration is often cheaper and quicker because there is room for give and take from both sides.
Renting property can be a great way to earn income, but be sure you know what you are getting into before you start. It's not as easy as it may appear: There's a reason for the ne'er-do-well tenant/negligent landlord stereotypes. However, if you attend to the details with common sense and treat your renter with respect, you can have a great tenant-landlord relationship.
