Things You Should Consider About Becoming a Landlord
Real estate prices have become attractive, and with that, many people have had the idea to purchase a Palm Beach home as an investment property and become a landlord. While it may seem like a simple way to make money, there’s actually a lot to consider if you’re thinking about becoming a landlord. From nightmare tenants to late-night calls about overflowing toilets or broken air conditioning, when you’re the landlord, you’re the one in charge. Here are some things to mull over before you make the decision to purchase a Palm Beach investment property!
In a suppressed economy, landlords are faced with tenants who may not be able to supply the requisite first and last month’s rent plus security deposit up front. Trust your judgment, but be careful when accepting IOU’s when it comes to money. Also, know that it’s not uncommon to go through 30-40 applicants before you find someone qualified to live in your Palm Beach investment property.
Be careful when purchasing a condo, as association fees can run into the thousands of dollars. Instead, look for a duplex, triplex, small apartment building, or single-family home where you can call the shots.
In this market, financing can be difficult for buyers looking at investment properties. Close to 70% of investment properties are cash deals, so if you require financing, start shopping for a mortgage before you initiate your Palm Beach home search to avoid disappointment.
Remember that credit checks and criminal background checks are a must when you’re renting out something you own. Protect yourself by visiting websites like http://www.mysmartmove.com to gain access to the same tenant screening used by larger property management groups. For $25, you will receive a credit-based renting recommendation, national criminal report with 50 state sex-offender and terrorist search, renter fraud warnings, and automated renter identity verification.
An additional $5 will gain you access to the person’s credit report, score, and rental address history. Eviction fees in Palm Beach County are approximately $185, not to mention the associated headache and hassle. Upfront due diligence will pay you back tenfold.
Think about collecting a non-refundable application fee in cash before you show a property to a prospective tenant. You need to cover your time and effort, and requiring an application fee will separate the truly interested from those who are just wasting your time.
Never indicate that you’re desperate for a tenant. You don’t have to take the first renter that comes along. Take your time to check an applicant’s personal references as well as rental references, and verify their job. Treat your job as a landlord like it’s dating; there are plenty of fish in the sea.
Also, try to keep your emotions out of it. We are human, and it’s easy to get caught up in a person’s sob story about why they need to rent from you. Remember, this is a huge investment of your time and money, and it’s a business decision above all else.
Read through Florida Landlord Tenant Law thoroughly. The Florida Statutes Chapter 83 will be of particular interest, and it would be wise to give a copy to your new tenant too so that everyone has a mutual understanding of the agreement. This can help avoid disputes down the line, and also alert you to your rights as a landlord, like being able to enter the property at any time in case of emergency, or under other circumstances (such as repairs) with 12 hours notice.
Know that most applicants won’t have an 800 credit score. Many people are forced to rent because they have just lost their Palm Beach home, and that has a big impact on their credit score. Use the applicant’s previous landlords as references.
Have a lawyer review the lease you draw-up. A written lease is an essential, binding document, and standard leases can be easily found online at sites like http://www.mrlandlord.com.
Additionally, you can purchase them at office supply stores like Staples. Once you have created a lease, it’s a good idea to have a real estate attorney look it over and advise you. You will want to include clauses regarding late rent, how many people are allowed to live there, and if pets are allowed or not. Leases should be highly specific so there isn’t any room for interpretation or misunderstanding.
We are a team of luxury real estate agents who specialize in Palm Beach County real estate. Please contact us if we can help you find the Palm Beach home of your dreams. Call Palm Beach Premier Real Estate today on 561-395-8418 or email us at Info@PBPrealestate.com
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