It takes more than a keen business sense to lease rental property in a way that maximizes profits, meets all necessary legal requirements and protects you as an owner. If you recently moved from your home and leased it out, or inherited a rental, you’re in one of the largest demographics of real estate investors: accidental landlords.
When it comes to leasing, the learning curve is a harsh one. I kept my first home as a rental property after I moved out and thought I could handle managing it myself. Worth noting, this was before I was in the property management business myself. I didn’t yet understand what managing a rental would entail, and things went south before long. I wound up dealing with an eviction lawsuit and a lot of learning experiences.
Here are four tips to steer you straight in the complex process of leasing:
Don’t Underestimate Your Responsibility
If you plan to lease your own property, you should know exactly what you’re getting yourself into before you’re neck-deep in the process. I highly recommend taking a class on the fair housing laws in the state where you own property, so that you don’t wind up in a lawsuit or jail for illegal practices. If you haven’t already, you should also join the AOA so that you can run credit and eviction checks through them. And the longer I go on about all the necessary preparations you’ll have to make in order to lease your own property, the more confident I am with the advice I always give, which is to hire professionals to manage and lease it instead. Of course, it’s possible to lease successfully on your own, but given the serious obstacles and dangerous liabilities that come with it, you’ll be better served hiring a company you trust.
Hire a Company with a Licensed Realtor
Now, if you do choose to hire a professional property management company, remember that not just any will do. Companies with licensed real estate agents on staff have a significant advantage when it comes to leasing because their agents are up to date on the most recent state laws and know the legal ins and outs of renting property. Being a licensed real estate agent means more than having passed an exam; a true leasing expert knows market specifics and leases confidently with knowledge of all of their state’s fair housing laws.
Vet Internet Presence
It’s 2020, so when the first management company you speak with says, “We’re on the internet,” keep in mind that everybody is. Even your Aunt Caroline has an Instagram now. Vet the internet presence of every company you consider, and not just to see how their website looks, but also how they market their clients’ vacancies. Find out how many platforms they advertise vacancies through. Are they using virtual video tours? These are all crucial in today’s competitive rental marketing economy.
Don’t Cut Corners
Make sure the legality of the lease agreement you use is perfect to the letter of the law. This is more essential than I can possibly stress. A management company worth hiring will always be up to date on critical addendums required by law. Lawsuits regarding improper housing practices can eat up tens of thousands of dollars, not to mention years of your life.
Insurance is another element of the process that’s essential to take seriously. Hiring a company that knows exactly the right policy for your property is of the utmost importance. A personal friend of mine has lost a combined total of over $100,000 due to a lawsuit stemming from the fact that when he first rented his house to tenants, he had a homeowner’s policy instead of the landlord’s policy he needed.
[Editor’s Note: Be sure to call AOA’s Group Insurance Program for a FREE “Money-Saving” quote -– members have found it to have the most competitive Workers’ Compensation rates in California for apartment owners!]
Don’t become somebody else’s leasing horror story. Hire a trustworthy property management company with a licensed realtor, a robust web presence and a record of minding every detail of lease agreements and insurance. Profits and peace of mind will follow.
David Crown is the C.E.O. of Los Angeles Property Management Group, and has over twenty-five years of experience managing all types of income properties. A hands-on leader who has managed properties in 16 states, Mr. Crown has been asked to serve as an expert witness in property management matters, and currently serves on the Forbes Real Estate Council. He can be reached directly at (818) 646-8151.