A Beginners Guide to Renting Out Property
Buying a rental property can be an excellent investment. Whether you purchase an apartment building, a single-family home, a commercial property, or vacation cabin rentals, you need to know a lot about owning a rental property. There is more to owning rental property than finding tenants and collecting the rent every month. Although these are essential parts of being a landlord, there are other things you need to know if you are going to be successful.
Owning residential and commercial rental properties are very different, and the laws and essential maintenance will differ. Below is a beginners guide to renting out property, both residential and commercial, that will answer any questions you might have and can put you on the path to success.
1. Hire an Attorney
An essential part of the beginners guide to renting out property is hiring a real estate attorney. Whether you plan to invest in residential or commercial rental properties, you should have a real estate attorney working for you to help you navigate the process.
A real estate attorney can review the purchase agreements, title, transfer documents, and mortgage documents to ensure everything is in order. A minor mistake on the paperwork can delay the purchase, and an attorney can ensure everything is filled out correctly and nothing is missing.
If you are purchasing a commercial property, there are plenty of business contracts that have to be filled out and signed for the sale to go through without any delays.
If any problems arise during the sale, such as a lien on the property that has to be handled or a dispute regarding the property’s borders, an attorney can help. An attorney can quickly take care of any issues to prevent a delay in the sale. A real estate attorney can also advise you on inspections and will be there when you close on the property and make sure all business contracts are in order at the time of the sale.
2. Write a Lease
When you purchase commercial real estate and rent space to various businesses, each business must have a commercial real estate lease. Understanding how the lease works is an essential part of the beginners guide to renting out property.
If every unit in the building is occupied, the existing lease will still be in effect, and you have to honor the terms and conditions of the original lease. The old owner couldn’t raise the rent until three years had passed, and neither can you. When the tenants’ leases have expired, you have the right to update the lease.
If some or all of the spaces are vacant, you will need to create a new lease. If you aren’t familiar with commercial real estate laws, you should hire a real estate attorney. There are three types of commercial real estate leases, including:
- Full-service leases
- Net leases
- Modified gross leases
A real estate attorney can help you choose the best lease for your situation. In addition, they can help with negotiations that lead to signing the lease, which can be confusing without an attorney on your side.
3. Hire an Office Cleaner
When buying a commercial building, you are responsible for the cleanliness of the building. Not only should you make sure that every unit is clean, but you also need to ensure the hallways, stairwells, bathrooms, and common areas are clean. Your tenants don’t want to do business in a filthy building, and you risk losing them if the building isn’t cleaned regularly. Cleaning the entire commercial property is a lot of work, which is why hiring an office cleaning service is part of the beginners guide to renting out property.
When hiring a cleaning service, you don’t want to hire the first one that comes up during a Google search. It’s best to work with a cleaning company with commercial cleaning experience, as commercial and residential cleaning are very different. When choosing the best office cleaning service, there are several things you should look for.
- Schedule flexibility: It’s best to hire a service with flexible schedules available. Your tenants won’t want someone cleaning their space during regular business hours, and you will need to hire someone willing to work around the tenant’s schedules.
- Affordability: It’s best to get quotes from a few different companies to find one that fits within your budget. If a company gives you a much lower quote than the other quotes, it’s best to choose someone else. The company that provided a significantly lower quote may have a bad reputation, or their business is floundering. Instead, choose the company with the lowest quote close to the others you received.
- Extensive services: Keeping a commercial property looking its best takes a lot of work. It’s best to hire a cleaning service that is willing to vacuum, wash and buff the floors and who can provide the services your property requires.
- Customizable plans: Certain areas of the building should be cleaned regularly, while others not as often. For example, if you want the offices and bathrooms cleaned daily, but you want the windows and floors washed once a week, you need to choose a cleaning service willing to customize your services to meet your needs.
It’s best to hire an office cleaning service as soon as you purchase the building to ensure your tenants are happy.
4. Hire an Interior Painter
The next item in the beginners guide to renting out property is hiring a commercial painter. If the entire building is vacant or just a few units, a commercial painter can spruce up the vacant units with a fresh coat of paint. If every unit is occupied, you should still hire a painter to brighten up the paint in the hallways, stairwells, and common areas. Your tenants will appreciate the fresh paint in these areas as it will give their clients an excellent first impression.
If the painter did a good job, you should keep their card on file. You can hire them again when a tenant leaves, and you need to prepare the space for a new tenant. In addition, it’s a good idea to have the common areas repainted every few years to keep the areas looking nice.
5. Hire an Electrician
Before purchasing a commercial or residential property, it’s a good idea to hire an electrician to inspect the electrical system for anything that may have been missed during the initial inspection. The electrician can detect issues and give you an estimate of the repair cost before accepting an offer.
As the property owner, you are responsible for all necessary repairs, including electrical problems. You should also have the name and phone number of the electrician handy just in case something happens. For example, suppose lights are flickering in an apartment in a residential unit or circuits frequently trip on your commercial property. In that case, you will need a good electrician to make the necessary repairs.
The electrical system in a residential or commercial property is very complex, and if you aren’t a professionally trained and licensed electrician, electrical repair should never be a DIY project. Electrical problems are a fire hazard, and having an electrician on call can protect your investment and the tenants in the building.
6. Rent Dumpsters
The next item in the beginners guide to renting out property is to find a reputable dumpster rental service with affordable prices.
If you purchase a residential or commercial property that is empty or has a few vacant units, you will need to clean everything out to get the unit ready to show to prospective tenants. A dumpster rental service will speed up the cleaning process if the previous tenants have left a lot behind.
There are a few things to look for when choosing the best dumpster rental service.
- The proximity to the property: It’s best to choose a company that’s located close to the property. If you choose someone located far away, they can charge you extra to deliver the dumpster and pick it up later.
- Various dumpster sizes: It’s best to work with a company that offers several sized dumpsters. For example, if you are cleaning just one unit and the tenant didn’t leave too much behind, you don’t want to spend extra money on a large dumper. In addition, if you have to clean several units or one tenant left a lot behind, you want to be sure the company has large dumpsters available.
- Transparent pricing: It’s best to work with a company willing to give you a quote with a complete breakdown of the costs. Some less reputable companies add hidden fees, resulting in a higher bill than expected.
- Reviews: Before choosing a dumpster rental company, you should check the reviews. You can learn a lot from previous customers, such as if the driver was on time for pickup and drop-off, if the prices are fair and if the company has a good reputation.
When you have found a company that checks off all the boxes, you can use them each time a tenant leaves, making the cleaning process faster, and you can get a new tenant in as quickly as possible.
7. Obtain a Roof Inspection
A healthy roof is essential in any building, whether you live there or rent to tenants. Roof issues can result in leaks that can damage the structure of the home and anything inside. In addition, leaks can cause mold growth which can be expensive to eradicate.
To ensure the roof is in good condition, the next item in the beginners guide to renting out property is to have the roof inspected. If you have the inspection performed before the sale goes through, you can get a new roof estimate to lower the asking price. If the damage occurs after you have purchased the property, you can get an estimate for the cost to replace the roof.
If you live in a part of the country where it gets very cold and snows during the winter, you should have the roof on your rental property inspected for damage every spring.
8. Consider Renting Tools
Dealing with cosmetic issues and damage is common when owning rental property. As the owner, it’s up to you to ensure the necessary repairs are made. If you are a handy person, you can fix the cosmetic issues or damage yourself, but you will need the required tools to complete the job.
If you don’t have what you need to make the repair, purchasing tools that you may only need once is a considerable waste of money. Fortunately, you can rent tools from Home Depot and other tool rental companies, and it will keep the repair cost down.
You can rent just about any tool, such as bolt cutters, drills, drivers, handheld sanders, levels, planers, saws, and handheld grinders. You can also rent an air compressor for nail guns, pressure washers, painting, and restoration projects.
An essential task in the beginners guide to renting out property is finding a tool rental service with every tool you could need. Doing the research and finding a company that provides tool rentals when you first purchase your rental property is best because you will know where to go when it’s time to make a repair.
Buying residential or commercial property is an excellent investment, as long as you know what you are doing. If you understand the beginners guide to renting out property and you follow the tips religiously, you are on the right path for success. Many real estate investors hire a management company to handle the day-to-day tasks; however, this isn’t necessary unless you own multiple rental properties. You will have to pay the management company to handle things for you, which will come out of the profits you make each month.
Fortunately, following beginners guide to renting out property will allow you to handle things on your own, leaving more money in your pocket. If you follow the tips listed above, your sale should go through without a hitch and you will always be prepared if there is a problem or work needs to be done.