If you’re managing your own rental property, there’s a lot to think about. Sometimes, it can seem overwhelming. Today, we’ve put together nine leasing tips that can help you when you decide to rent out your Colorado investment property.
Tip 1: Tenant Screening
Don’t let anyone live in your property without conducting a tenant screening. The goal in renting your property is to find a tenant who is going to pay rent on time and take good care of your property. We recommend that you check credit history, do a background check, and talk to landlord references. You may also want to do a criminal check and possibly confirm their employment. At Cornerstone, we also check the sexual predator database. These things are part of our five main tenant screening checks.
Tip 2: Use Written Agreements
While you can rent a property with only a verbal agreement, we do not recommend it. Everything should be written down in your lease so it is clear. Tenants need to know who is responsible for what. A lease agreement in writing also protects you.
Tip 3: Security Deposit Accounting
You must provide accounting for the tenant’s security deposit. That is the tenant’s money and you are responsible for returning it at the end of the lease. Those funds are to ensure completion of the legal contract you have with the tenant. The money should not be spent on repairs or any other expenses during the course of the tenancy. Most states have requirements on the timeframe you have to return the security deposit to the tenant. In Colorado, you have 30 days to provide the security deposit and the accounting of any funds that you used. If your lease specifies you can have a longer timeframe, you can have up to 60 days.
Tip 4: Making Repairs
You may have heard the phrase “a stitch in time saves nine.” That’s what we recommend for your rental property as well. Taking care of those smaller repairs as soon as you identify them could prevent you from paying for a larger maintenance issues down the road. With a well-maintained property, you’ll attract better tenants and increase your rental value.
Tip 5: Evaluate Your Insurance
If you currently have homeowner’s insurance on your property, you’ll want to notify your insurance company that you are moving from that property and it will be a rental. Then you’ll switch to a landlord policy. This insures the structure but not the belongings inside. The tenant should have a renter’s insurance policy to protect those belongings.
Your rental property is a business, which means you need liability insurance. It will protect you from injury claims and legal disputes if someone gets hurt at your property or sues you.
Tip 6: Maintain a Property Reserve
Whether these are funds that you set aside at the beginning or it’s money you set aside each month from the rent, it’s important to have a reserve. It will pay for any unexpected expenses or any high dollar items you encounter, such as needing a new hot water heater, fixing the air conditioning unit, or making a big roof repair. Those are expensive repairs, so you should have funds set aside for that.
Tip 7: Increase Your Security
Security can be a number of things. You want your tenant to feel safe in your property. So, you could provide some additional exterior lighting. You can also make sure that all the windows have secure locks that function. Even simple landscaping and trimming the hedges and trees will provide better protection for your property and your tenant.
Tip 8: Provide Notice Before you Visit
You own the property, but your tenant possesses it, and that tenant is entitled to privacy and peaceful enjoyment. Don’t drop by the property at random times without providing the tenant with any notice. We recommend that you address this in your lease. You should always provide them reasonable notice (24 hours at least), and you should only visit during appropriate times of the day.
Tip 9: Disclose Any Environmental Hazards
If you know that there are environmental hazards, you should certainly let the tenants know. For example, in Colorado if the property was built before 1978, there is potentially lead-based paint in the property. We would be required to notify the tenants of that fact before they sign the lease.
These are just a few things to consider before you begin leasing your property. If you have any questions or you’d like to hear more, please contact us at Cornerstone Real Estate.