What Do I Need to Know as a New Landlord? - NYCM Insurance Blog

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Apr 3, 2023

What Do I Need to Know as a New Landlord?

If you’re just beginning your landlord journey, you may have a lot of questions about what goes into renting out your property in a responsible and profitable way. And while you may be eager to rent out your unit as soon as possible, it’s important to do some research on things like setting the right price, choosing the right tenant, and creating a rental agreement.
While it can be exciting to begin your tenure as a landlord, it’s also a big responsibility that you shouldn’t rush into without first educating yourself. Continue reading to learn about six guidelines that every new landlord should follow!


Setting the Right Price


One of the first questions you may have as a landlord is: How do I know what to charge for rent? Regardless of the kind of market your rental unit is in, setting the right price is a big step to renting your unit.


When setting the price for your unit, consider things like the rent for comparable apartments nearby, the state of the neighborhood, and the state of the unit itself, including the quality and size.


On one hand you may want to maximize profits, but on the other hand, you also want to attract tenants who may be looking at several other properties, so finding a solid middle ground may take some work.


Accepting Payments Electronically


You should consider allowing your tenants to pay their rent electronically, especially if you are managing more than one property. As more and more recurring payments occur on an electronic level, allowing your tenants to pay their rent electronically will make things easier for all parties involved.


The perks of electronic payments include uncomplicated record keeping, fewer trips to the bank, and in some cases, quicker payments. Additionally, by accepting payment electronically you can save yourself the trouble of late or bounced checks.


Do some research with your bank to determine if there are any money transfer options that work for you, or consider using a verified third-party app.


Requiring Renters Insurance


Requiring renters insurance in your unit can save both you and your tenant a headache in the event that something unexpected happens.


As a landlord your insurance policy covers the building, but not the tenant or their belongings. Renters insurance offers coverage to your tenant, your tenant’s possessions, and even your tenant’s guests in the event that something unexpected should happen, at a relatively cheap price.


It also offers your tenant worldwide coverage, meaning their belongings don’t have to be at your rental unit to be protected.


Many insurance companies will allow policyholders to bundle renters with auto insurance.


Conducting a Background Check


Once you have generated some interest in your unit, you will want to do a background check on any prospective tenants before you lease it out. Ask the potential tenant for references and proof of income so that you can assess their professional and financial situation. Also, make sure you can verify their identity, and try to gauge if you are comfortable leasing your unit to this individual.


You can also run a credit background check on your hopeful tenant to look for any red flags, like past declarations of bankruptcy, or late or delinquent bills. Credit reports are usually obtained from one of three sources: Equifax, Experian, or TransUnion.


Be cautious in choosing a tenant; if the relationship ever sours, it can be difficult and costly to evict.


Creating a Rental Agreement


When you have decided to lease out your unit, have your tenant sign a rental agreement. The rental agreement is the most important part of leasing out a unit; any rules you would like your tenant to abide by must be agreed to in the contract.


If you are having trouble creating a rental agreement, you can look at sample agreements online and make changes where applicable to cater it to your preferences.


This contract acts as concrete evidence of the agreement you are making with your tenant and you should be thorough.


Keeping Digital Records


The last thing a good landlord should know is the importance of keeping thorough records.


Before leasing out your unit, take pictures of each room so that when the tenant moves out, you can identify any damage the tenant may be responsible for paying for or repairing.


Once your rental agreement is signed, keep the physical copy somewhere safe and upload a digital copy to your computer for easy access if needed.


Keep records of every payment received, including the amount, date, and payment method, so that you can stay on top of it and can point out any discrepancies if needed.


You will never regret keeping too many records, but you may regret not having them if you need them!


Are you thinking of renting out your home to earn some extra income? Here are four things you need to know before you do.