When you decide to rent out a residential property, you have a choice to make. You can either manage it yourself, or you can hire a professional to manage it for you.
If you manage the landlord/tenant relationship yourself, you have certain responsibilities. Hiring someone will obviously cut into your profits, and it usually makes the most sense if you're renting multiple units or dwellings.
Meet All Rental Requirements
Municipalities usually have building codes that detail exactly what a landlord must provide for a tenant regarding habitable conditions and safety measures. These usually include things like outdoor lighting, working locks, and working plumbing and electricity.
Before you rent out your property, check to make sure it meets your area's codes. After you rent it, you must make sure all these things remain in working order.
Laws for Security Deposits
When you accept a security deposit from a new tenant, you're responsible for returning it at the end of the lease, assuming the tenant hasn't damaged your property. Because you're holding this money for someone else, this gives you a "fiduciary" responsibility toward it.
"Fiduciary" means you're taking care of the money for someone else who trusts you with it. Laws vary from state to state as to what you must do with a security deposit after receiving it, but you usually can't deposit it in your personal checking account.
Manage Your Expenses and Income
If you choose to manage your residential rental property yourself, you'll have to do the unpleasant work of chasing down your tenant if the rent is late.
When you receive rent payments, this is your money. You can do whatever you like with it. Unless you want to pay property related expenses out of your own pocket, you might want to set some of this income aside for taxes, mortgage payments, insurance, and maintenance costs.
It can help to set up a special bank account. You'll also need meticulous records to back up your income tax return at the end of the year if you claim any losses.
You're On Call
Property managers must arrange for all repairs and maintenance of residential rentals. Your tenant must be able to call someone immediately if a pipe bursts in the middle of the night and needs immediate attention. If you don't have a property manager, you must give your tenant a phone number where you can be reached 24 hours a day.
Beyond emergency repairs, you must also either perform routine maintenance yourself or hire contractors to do it for you. You can assign some tasks to your tenant, such as mowing the lawn, if you include those terms in your lease.
A Residential Real Estate Lawyer Can Help
The law surrounding management of residential rental property is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a residential real estate lawyer.