The Risks That Come with Being a Landlord
More people are choosing to rent out properties they’re not using to earn some money. While you’ll face unexpected incidents while renting your home, there are common risks you should know. By knowing these potential risks, you could take the necessary steps to prevent them from happening and mitigate their potential effects.
One of the most difficult tasks you need to do is to screen prospective tenants. While some landlords hire a property manager for this and other landlord-related tasks, you could do this on your own. You simply need to conduct thorough reference and background checks and know how to read them when you meet them face-to-face. Don’t forget to request their rental history, so you have an idea if they’re moving to the end of your tenancy agreement or if they’re planning on staying longer.
Whether it’s malicious or unintentional, you’ll probably come across property damage in your rental property. Potential damage could include simple damage to fittings or fixtures or more permanent issues with your property’s structure. In any case, your landlord insurance — considering that you have one — should cover these.
If someone gets injured in the property you’re renting out, there’s a possibility that you could be sued for the injury. How could you protect yourself? Get liability coverage that would offer protection in case someone gets injured, sick, or died in/due to your property. United States Adjusters and other experienced public insurance adjusters added that your liability insurance should also give your protection against damage or loss to another person’s property.
Problems with Payment
Making it explicitly clear to your tenants that you expect to receive rent on a specific, predetermined schedule is crucial. That said, consider putting in writing the potential ramifications or penalties of missed payments.
Being a landlord could be a lucrative venture if you’re fully aware of the potential risks involved and how you could manage them. Although it’s not entirely possible to control some of the risks, you could mitigate them successfully with the tips above.