1. Get Your Property in Rentable Condition
In general, you will need to make sure your rental property is safe, everything in it is working, and it is clean. We have detailed what you need to get your property ready to rent in our article, Ready to Rent: A Checklist for Landlords.
Keep in mind that as a landlord, there are safety standards you must adhere to per your city and county codes. Not meeting those standards leaves you open to liability. We recommend searching for your county and city housing codes or landlord laws through an online search.
In Virginia, the Residential Landlord and Tenant Act outlines the specific things you are responsible for as a landlord.
2. Assess Your Property Value
Once you have gotten your property into rentable condition, you’ll have to look at your property and evaluate it against the current rental market in your area. You may find that it’s time to make renovations to your property as making upgrades can lead to a higher rent rate and a shorter time to occupancy.
Look at comparable properties in your area to see how your property stands up next to them. You can review sites like Zillow, Trulia, Hotpads, and Homefinder to find homes in your neighborhood that are similar to yours. Look for properties with the same number of bedrooms, bathrooms, square footage and amenities, (Like garages, walk-in closets, modern kitchens, proximity to schools and shopping, etc.) so that you can make an apples-to-apples comparison. You can also contact us for a free rental price analysis. Our video also explains more on this topic.
3. Decide If You Are Going to Manage the Property Yourself
If you live nearby, have a flexible schedule, and are handy around the house, you may want to manage the property yourself. (Read our article, Are You Cut Out To Be A Landlord? to understand more about the skills you need to manage your property.) You’ll need to market your property, (How to Market Your Rental Property) find tenants, (How To Choose the Right Tenants) and attend to the day-to-day maintenance (What Maintenance Am I Responsible For as a Landlord?).
If you don’t live near your rental property, or the prospect of finding tenants and being on call for maintenance leaves you less than enthused, you will need to find someone to manage it for you. There are plenty of professional property management companies to choose from, but they are not all the same. You’ll need to screen them carefully. (Read our article Top 10 Questions to ask a Property Management Company.) If you’re not sure what you can expect from a property manager, read our article, What Does a Property Manager Do? After reading the resources we have outlined above, you will be able to decide how you’re going to handle the management of your rental property.
4. Find a Good Accountant, or Set Up Your Financial Reporting Systems
Running your rental business will require keeping records of all your income and expenses. If your rental earns a profit for the year, you will have to pay quarterly taxes on that income, If you expect to owe more than $1,000 in income tax from your rental business, the IRS will require pre-payment of those taxes during the year. Get an accountant or accounting system in place before you find your first tenant. If you decide to hire a property management firm, they will handle the bulk of the financial accounting that you can then hand off to your accountant.
As you have probably gleaned from this list, becoming a landlord is not a quick or easy route to riches. There are a lot of steps involved and a fair amount of risk. You can mitigate hazards by being informed and having experienced professionals on your side. Consult an attorney and accountant for legal and tax assistance. And look to professional property management for help with leasing your property and managing it. What you spend now in consulting fees will save you in the long run. (Read: How Much is Property Management? Is It Worth It?)
We are happy to answer any of your questions. Contact us to discuss your property.