One of the first things a person should do, when considering investing in rental property, is contact the Springfield Apartment & Housing Association and get an outline of the laws involved in the business, according to Sharon Wilson, property manager with Hunter Property Management Inc.
The prospective landlord would do well to learn the rights of both tenants and owners, including such issues as collecting rents, eviction and discrimination, Wilson said.
There are several sources for information about the ever-changing laws. Among them is a monthly newsletter put out by the apartment association, available free to members, Wilson said.
In going into rental property, a person must realize that they are on call 24 hours a day. They have to be aware that advertising, showing and regular maintenance of properties is an ongoing proposition and they need to be prepared for some slack time in income while a property is vacant or during the process of ousting a deadbeat renter, she said.
The prospective landlord would be wise to consult an accountant concerning the types of properties that best fit his or her objectives, and a real estate attorney can be helpful with the legal aspects, according to Wilson. It also helps if you're handy, she added.
An accountant or attorney can also advise the property owner about tax advantages and types of ownership. Property held in a limited liability company can relieve the owner of some personal liability, according to Judi Samuel, co-owner of Debco Inc.
Liability insurance is a must and another expense that must be considered in the ownership package. The property owner may also want to encourage tenants to carry renters insurance.
Some investment-property owners may start out on a break-even basis, using the tax advantages and building equity in the property for future gain. Though rental property can produce a steady income, it is not necessarily a good short-term investment, Samuel said.
Samuel pointed out that prepackaged, office-supply-store lease forms may not address all issues that need to be covered. She recommended landlords obtain forms from a group such as the apartment association, or have them drawn up by an attorney who specializes in this type of contract.
It is also necessary for the landlord to be aware of specific laws, such as those regarding lead-based paint, which apply to any structure built prior to 1978. Forms regarding lead-based paint are available for the property owner to have the tenant sign, and failure to use this disclosure could result in trouble down the road, Samuel said.
Like Wilson, Samuel said she feels membership in the Springfield Apartment & Housing Association can provide a valuable source of information. The association provides not only printed material, but holds informative meetings and seminars.
In May, June and July, the association will offer Combat Training, a Jackson County program that teaches property owners how to recognize methamphetamine labs, what to look for, what to do and what not to do, according to Lynn Richards-Ludwig, executive director of the association. The program also goes into what happens if methamphetamine is found on an owner's rental property.
The association provides its members with networking opportunities to share income-generating and money-saving ideas, attorney-prepared lease forms and addenda, education programs and access to the association's free legal hotline
In selecting properties for rental income, Samuel advises a person to use the same care they would in buying their personal residence. Location is the key, she said.
The second concern is screening pro spective tenants, Samuel said. This is an area where management professionals can be especially helpful because of their experience.
Another place where a professional manager is helpful is collecting rents. It is easy for the new landlord to be sucked into a hard luck story. Seasoned property managers have already heard it all, and while they are not callous to the tenant's woes, they are more objective about the problem. It must be treated as a business, Samuel said.
Gene Hawkins, owner of Gene Hawkins Company, Realtors, summed up the attributes needed to start building an income from rental property. The new landlord must be very handy, energetic and have good rental forms that address all important issues.
Hawkins said the landlord and tenant should do a walk-through to make sure any defects are noted in writing so the tenant will not be held responsible for something that already existed.
It's a good idea to start out small with single-family dwellings or duplexes, and work up to something bigger, Hawkins stated.
An investment property owner can always trade up for larger units with a resident manager and maintenance man once he has learned the ropes.
The owner should always oversee operations and see that things are done properly, no matter how good the help is.
"By starting small and learning as he goes, the landlord can see how much aggravation he can put up with," Hawkins said.
All three management professionals agreed that owning commercial rentals entails much the same aspects as residential although in some ways it is easier. The landlord is not as likely to get a complaint call in the middle of the night.
Commercial is easier, Hawkins said. Landlords on that side are dealing with professional people.[[In-content Ad]]
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