Whether you've inadvertently inherited a rental property, or find yourself renting out a room to a friend or family member for an extended period of time, you've become an accidental landlord without actually knowing it.
Whether you like it or not, accidental landlords still bear the same responsibilities as intentional ones. This means it's time to get your affairs in order. Here are the top three landlord tips to follow.
1. Update Your Lender
If you're the property owner, you are most likely paying off a mortgage via a lender, unless, of course you've inherited a rental home that's paid off. If you find yourself in a situation where you're paying a mortgage but the occupancy of your home changes, the first thing you need to do is update your lender.
The reasoning here is that your lender needs to know about changes to the property that could impact its value, and your ability to pay your mortgage. The same applies if you wanted to make any significant renovations to the home.
The addition of renters to your property could also increase the possibility of damage and general wear and tear. Your lender needs to know about this and might make adjustments where necessary.
2. Update Your Insurance
You most likely already have homeowner's insurance, but unfortunately, that just won't cut it when you become an accidental landlord. It's imperative that you visit your insurer and let them know about the tenants renting your property.
They can advise on the best insurance route to go - you might need to change your policy entirely, or simply take out additional landlord's insurance. Either way, it's best to get the advice from professionals before you make a decision.
Why is additional insurance so important? Because it covers any potential damages or general wear and tear caused by your tenants.
3. Get Your Taxes in Order
This might not be something that immediately crosses your mind to do as an accidental landlord, but it's an essential part of rental property management. Due to the fact that you'll now earn more money as a landlord, you'll need to update the IRS about this additional stream of income.
The best thing to do is contact your accountant or a property management company to advise you on how to update your taxes and get them in good working order.
4. Draw-Up an Airtight Lease Agreement
Now that you're a default landlord, it's up to you to cover yourself and protect your property - no matter how much you trust your renters. That's why it's so important to draw-up a lease you can rely on when you need it.
You never know when things could turn south. You could find yourself in a serious pickle if you don't cover all of your legal bases within a lease agreement. At the very least, make sure the agreement outlines two important factors: the term of the lease and how your tenant will pay for the rent.
A lease is also a good way to keep your tenants happy and ensure their safety as a landlord.
When Do Accidental Landlords Need Support?
If you find yourself in over your head as an accidental landlord, you know it's time to contact a property management company. If you're feeling overwhelmed and confused about managing a property, PMI is here to support accidental landlords throughout the Denver, CO, region.
With years of expertise in managing properties of all shapes and sizes, learn more about the services we offer and how we can help you get your affairs in order.
