new landlord

Are you a New Chico Landlord?

new landlordRenting out a local property has the potential to be a lucrative endeavor, but there are many to-do’s to cross off your list before you start taking in tenants.

With Chico vacancies low and rental rates climbing, renting out your Chico property might seem like a lucrative opportunity right now. But before you get into the rental game, you need to have a rental game plan.

Here are a few tips on getting started with your rental from the “pros”.

It’s a Time Commitment
Depending on how many units you want to manage, it’s definitely a big time investment. People often underestimate the amount of time it takes to be a good landlord.

Even when it comes to evicting a tenant, local, state or city regulations may permit a tenant to stay even when rent money is owed. Whether or not you use a property management service, screening and finding new tenants, dealing with leases, managing repairs and collecting rent all take time.

Have a Financial Plan
You have to analyze this like any investment taking account for cashflow, taxes and more. But the key is knowing how to analyze real estate, which an broker or financial adviser may help you understand. It’s like understanding a how a micro-business works.

We suggest you identify your long-term goals with the property and your expectations for appreciation, revenue and expenses.

Perhaps you put aside 20% of annual rental income as a “rainy day fund” in the case that you are faced with a costly repair to your property. Or for investment on a capital improvement that will increase your rental rate/income. Perhaps even purchase another property.

When finding tenants, do your homework. Run credit checks on all applicants and check their references of past landlords.

Most individual owners don’t have the ability to run credit; they don’t know how to call and talk to a landlord. But a number of online credit-check services are available; most require a one-time or subscription fee.

Finding good tenants can be a time-consuming process and is an important consideration to take before renting your property, says Murphy.

Know the Chico Market
If it’s a neighborhood heavy in rentals, go on several rental sites and see the rental price of comparable units. On the other hand, if your property is in an area with a lot of homeownership, talk to a real estate agent about what people are looking for in the market and what’s important to them.

Getting that first-hand knowledge will definitely be helpful you look to either buy a rental unit or convert something they own to a rental unit.

Get legal advice
If you’re a first-time landlord who has no prior knowledge of legal contracts and leases, sit down with a real estate attorney. Make sure to have him or her recommend a contract that can be enforced, in the case that there is a tenant violation.

Use a Property Management Service
The easiest way to combat making fatal first-time errors is to hire a good property-management service. From maintenance and repairs to credit checks, a good property manager can lessen the burden of landlord duties. And it’s usually cheap in comparison with other expenses.