Real estate investing can be a huge financial opportunity, especially in a market like Mesa, where the demand for high-quality rental homes is high. Even owning one rental home is a lot of work, however, and before you dive into the process of leasing, managing, and maintaining both a property and a tenant, you need to ask yourself: are you ready to become a landlord?
It seems easy enough, right? You put your property on the market, you splash a few online ads across the internet, and then you choose a tenant and collect rent.
That describes some of the basics, but there’s a lot more to it. If you’re not prepared, you could find yourself losing money or landing in court.
To effectively become a landlord and rent out a home, you must be prepared to put together a legally enforceable lease agreement, understand Arizona’s security deposit laws, screen for well-qualified tenants, assemble a list of vendors and contractors, and commit to providing a positive rental experience for your tenants.
Being a landlord isn’t for everyone. Not only does it require a set of skills and talents that not everyone can access, it also requires a mindset and a personality that’s focused on customer service.
Here’s how to know if you’re ready.
Are You Emotionally Attached to the Mesa Home You’re Renting Out?
The first question you’ll have to ask yourself is whether you’re emotionally attached to the home you’re renting out.
Maybe it’s the house you grew up in. Maybe it’s a home you’re leaving in order to get married. Perhaps it’s a property you’ve inherited from a beloved relative.
Whatever your reasons for having a property to rent out, you have to make sure you don’t love that home too much. Otherwise, you could have trouble as a landlord.
It’s essential that you treat your rental property like a business. Most landlords have their own full-time job and some family responsibilities. You probably have a few hobbies and passions you enjoy pursuing. You’ll need to make time for your new rental business and you’ll need to realize exactly what you’re responsible for.
Renting out a home is a way to bring in some extra income, but it’s more than that. You’re providing housing to tenants. Tenants are your customers. Treat this like a business. If you’re emotionally attached to the property or hoping to become best friends with your tenants, you’re probably not ready to be a landlord.
Running your rental property like a business means remaining professional with your tenants, keeping your finances accurate, detailed, and intact, and making decisions that are best for your investment.
To run a successful business, you’ll need to comply with federal, state, and local laws. You’ll need to establish a respectful and positive working relationship with your tenants, and you’ll need to understand negotiation and compromise.
It’s also important to protect yourself and your property from potential accidents or liability claims. Make sure you have the right insurance in place so you’re covered.
You cannot be a successful landlord until you are sure you’ve detached emotionally from the property. Once you can look at it as a business opportunity, you’re ready to be a landlord.
Making Sure Your Mesa Property is Rent-Ready
Successful landlords have attractive rental properties that well-qualified tenants are eager to rent.
Your best prospective tenants are looking for clean, well-maintained homes in good neighborhoods. If you lived in the property yourself before deciding to rent it out, make sure you:
- Clean out all of your personal possessions. Don’t leave a lawnmower in the garage or a toaster oven in the kitchen. Tenants want to move in with their own things.
- Check for any maintenance issues that may need attention. Maybe you were willing to live with the bathroom door that didn’t close all the way. Your tenants will want that fixed right away.
- Have the home professionally cleaned. Every surface needs to shine.
- Convert your homeowner’s insurance policy to a landlord policy. If you don’t have the right coverage, a potential claim may be denied.
As you prepare to list your home for rent, make sure you have good data that can tell you where you should price it. You should have enough of an understanding of the Mesa rental market to know what similar homes are renting for in your immediate area. You can get a general idea of what local rents are by looking at sites like Craigslist and Zillow. But, to really establish a competitive and profitable rental value, talk to a Mesa property manager who can provide you with some comparable rents.
Can You Screen Mesa Tenants Impartially?
If you’re going to be a landlord, you cannot choose tenants just because you like them. There’s a process that needs to be followed, and you need to be consistent. You also need to document how and why you’re choosing one tenant but rejecting another.
Tenant screening is one of the most important things that a landlord can do. The type of tenant you place in your property will have a huge impact on the rental experience you have. With a good tenant, rent will be paid on time, your home will be well-maintained, and the lease terms will be followed. You won’t find much wear and tear when the tenants move out.
You don’t want to rent to bad tenants. When a problematic resident is in place, you can expect late rent payments, a lot of excuses, and promises to pay that are left unfulfilled. You might have to evict your tenant eventually. Bad tenants will violate the lease agreement, ignore your attempts at communication, and sometimes damage your home.
Bad tenants are a risk, and that’s why tenant screening is so important.
Screen tenants carefully while complying with all fair housing laws. If you’re not sure you have the resources or the knowledge to do this correctly, it doesn’t necessarily mean that you’re not ready to become a landlord. It simply means you need some support from a Mesa property manager or a professional screening service.
You Need to Access a Strong Lease Agreement
You need to put together a lease agreement that protects you, your property, and your tenants. A written lease is essential because it puts into writing all the expectations you have and all the responsibilities your tenants are agreeing to.
Wondering where to get a lease? Look for a sample lease that’s specific to Arizona. You don’t want to download any template you find for lease agreements on the internet. Talk to a property manager or a real estate attorney so you can be sure that everything you need is included in your lease.
Can You Maintain Your Mesa Rental Home?
As a landlord, you’ll need to plan for:
- Emergency maintenance
- Routine repairs
- Preventative maintenance
Maintenance is a huge part of being a landlord. Even if your home is newer and in great condition, you’re going to have to perform some ongoing inspections, service calls, and work in order to keep it in great condition.
There will always be minor issues like garbage disposals that are stuck, toilets that won’t flush, or appliances that are acting funny. There may be larger issues too, like leaks under a sink or a rusting water heater or a roof that needs repairs.
Will you be prepared to make those repairs?
You can’t be a landlord until you are prepared, and there are two important things you need:
- A maintenance budget or reserve
- A strong list of vendors and contractors who can help you
Tenants become easily frustrated when the response to repair needs is lacking. When you receive a repair request from your tenants, take care of it right away. They might be asking for something minor, or maybe it’s a cosmetic issue that they’re complaining about. Still, the request deserves a response.
Your vendor list will be critical. Maintenance costs have been going up across the country, so you’re looking for licensed and insured professionals who can do high-quality, cost-effective work. Put together a list of plumbers and electricians as well as roofers, cleaners, handymen, HVAC technicians, and landscapers. Establishing relationships with these vendors before you need them will help you maintain your rental property better. You don’t want to be looking for a plumber in the middle of the night when your tenant reports a major leak.
There are many other considerations that go into becoming a landlord. Many rental property owners choose to work with professional property managers. It saves time and money and it allows you to access a team of experienced professionals who have been leasing, managing, and maintaining investment properties for years.
Even if you are ready to be a landlord, property management in Mesa can help. You’ll find you have a better - and more profitable - rental experience.
If you have any questions, please don’t hesitate to contact us at TCT Property Management Services. We manage homes in the East and West Valley, including Phoenix, Gilbert, Chandler, Scottsdale, and Mesa.