“What Do You Need to Be a Landlord?”
A lot of people have been asking me lately, “What do you need to be a landlord?” It’s likely because so many have been discovering the profitability of a rental business recently.
The idea of entering an industry where customer demand only seems to be going up is certainly attractive. From personal experience, I can also say it’s as profitable as the market suggests.
However, that’s only if you set it up properly. That brings us back to the question of what do you need to be a landlord.
Today, I’ll answer the question of “What do you need to be a landlord” for all the would-be landlords out there. In the process, I’ll help you get started on your new rental property business.
What Do You Need to Be Landlord — A List of Items
Before anything else, let’s note that there are parts of the answer to “What do you need to be a landlord” that may depend on the situation.
Consider, for example, that you need a license or registration for your business to be a landlord in some cities. In some others, it’s not required at all!
So some of the answers to “What do you need to be a landlord” will rely on your circumstances. That being said, there are others that are applicable to all situations as well.
Those are the things we’ll take up in this list of answers to the query “What do you need to be a landlord”. Let’s begin with the most obvious entry in the list, which is a property of your own.
A Property to Rent Out
Why bother mentioning this? Because it’s necessary to clarify that you can’t be a landlord if you’re only renting out property someone else owns.
If you’re doing it as a proxy for the actual property owner, then you’re likely just acting as a property manager.
If you’re doing it as someone who’s renting the property yourself, then you’re subletting (and this is ultimately still the decision of your landlord).
In short, you need to own a property in order to act as the landlord renting it out. Moreover, you need to ensure that your property is one that may be rented out in the first place.
Wondering what that means? Well, it’s not too complicated.
When asking “What do you need to be a landlord”, you should remember that landlords have to abide by the law… and most states have building codes that landlords are obliged to observe.
If your property is not safe or is insufficient disrepair to endanger future tenants’ lives, you shouldn’t be renting it out. No smart landlord would risk the legal hot water they can get into by endangering tenants.
A Consultant on Landlord-Tenant Law
We’ve already mentioned laws and legalities. Well, they’re actually another answer to the question of “What do you need to be a landlord”.
You see, there’s a whole host of legislation you’ll need to observe as a landlord. It varies by state sometimes (like on topics such as eviction) but can also be universal (or country-wide in effect, anyway, like on Fair Housing principles).
Now, if you’re not a lawyer yourself, hunting down all of those laws and ensuring you abide by them can be a headache.
That’s why it’s advisable to spare yourself a headache by getting professional assistance.
So when people ask me, “What do you need to be a landlord”, I usually tell them they need a good lawyer. That’s because he can guide them through the process of setting up and running their business lawfully.
For example, a lawyer with a specialty in landlord-tenant law can help you make a good lease or rental agreement. That brings us to another answer to “What do you need to be a landlord”, actually.
A Rental/Lease Agreement
When I say a rental/lease agreement is one of the answers to “What do you need to be a landlord”, I’m actually talking about more than the contract you’ll present to tenants.
I’m talking about the actual substance of it, i.e. the rules and guidelines you intend to have yourself and tenants follow.
When covering this part of our list of answers to “What do you need to be a landlord”, consider things like the following:
- How you want your tenants to behave (this may also be where you figure out what types of tenants you want in the first place).
- Who should be responsible for maintaining what parts of the property?
- Which types of damage (and where they are located) you plan to be responsible for fixing, and which types you want tenants to fix themselves.
- Whether or not you allow pets on the property.
- Whether or not you allow subleasing.
- Whether or not you will implement penalties/fees for late payments.
- How you want tenants to pay rent (and how much rent they should pay, for that matter).
- How long tenancies will last, on average.
As you can see from the above rundown, this is a critical step when answering “What do you need to be a landlord”. It’s where you establish just about all of the policies for your business.
The agreement itself is just going to be the document that sets down these policies in writing. That’s from where its importance derives — it’s a legal reference that may be used by both the tenant and landlord later on.
A Tenant Screening Process
This is another part of the answer to “What do you need to be a landlord”. You see, once you’ve determined how you want your tenancies to work, you now need to find the right tenants to abide by those rules you’ve set…
And the best way to do that is by screening applicants from the very beginning.
My advice is to look for those who have clean backgrounds. In other words, you want them to have as few “red flags” as possible.
Here are some red flags you want to avoid in your tenant screening:
- A history of bad debt.
- A history of eviction from other rental premises.
- A history of criminal activity.
You need background checks to screen applicants for these things, naturally. You can do some background checks yourself, like the credit report lookup.
Unfortunately, those seeking deeper background checks may need professional assistance. Still, it’s not too hard to manage given that there are many background checking companies nowadays.
So for most landlords, “What do you need to be a landlord” may be answered too by “background checking companies”. That’s if you’d rather have someone do most of the gruntwork finding data for you.
Basic Handyman Skills/A Handyman
When people ask “What do you need to be a landlord”, I usually tell them it helps to have some handyman skills. That’s because you’ll have to do a lot of upkeep and repairs on the property.
If you don’t have handyman skills or just aren’t inclined to learning them, though, that’s all right. You can always get some professionals to do the work for you, after all.
It helps to have go-to repair professionals for certain issues in your property. For example, you should have a go-to plumber, carpenter, etc.
Build good relationships with such professionals because it’s very likely that you’ll work with them more than once. The better your relationship with them, the likelier they are to provide you great service — and possible discounts!
Obviously, that sort of business-savviness is also part of what do you need to be a landlord. Try to build relationships with people who can help your business, because it benefit you later on.
Final Thoughts on the Necessities for Landlords
That wraps up my list of answers to the question “What do you need to be a landlord”. As you can see, it’s not as demanding as some might think.
To recap the answers to “What do you need to be a landlord”, here they are again:
- A worthy property to rent out as a landlord/owner.
- A consultant on matters of landlord-tenant law.
- A proper lease or rental agreement and tenancy contract.
- A tenant screening process you can apply to all applicants.
- Basic handyman skills or access to local handymen.
A lot of the things in this list are fairly easy to acquire. Perhaps the most challenging is simply the property itself, and chances are, you already have that if you’re looking up “What do you need to be a landlord”.
At any rate, keep the above things in mind as you plan the setup of your new rental property business. If you have more concerns about the query of what do you need to be a landlord, you can also leave them in the comments here.
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