Do you have tenants renting your second home? Maybe you have a residential property, be it an apartment, a townhome, or a commercial space? Then know that one of the best ways to secure your business is by having a risk mitigation plan.
Landlords and property managers face different risks when renting out a property. If you’re not careful, you can end up with a handful of lawsuits. The good news is that there are many ways you can mitigate such risks. Get to know five common risks when it comes to rental properties and ways you can address them before it is too late.
Mitigating legal risks starts by making sure that you have acquired the rental property the legal way. You don’t want to end up renting out the property only to have your ownership being questioned. Having a property attorney you can trust can give you that peace of mind, knowing all legal issues are covered and accounted for. Aside from this, make sure that your property is covered with the right insurance.
Since renting out a property is technically a business, make sure to stay on top of your taxes, both personal and business taxes. Take note of your accounting and bookkeeping tasks. Budgeting is also a big issue, as you need to make sure that you have enough cash to cover for emergency repairs and other expenses. If you find it hard to manage your taxes and other accounting tasks, you can look for an excellent property tax accountant in London.
There are two types of tenants: good and bad tenants. Every landlord and property manager should learn how to screen each applicant before saying yes to any of them. This will allow you to avoid opening your doors to tenants who are hard to deal with. But there are times when bad tenants can slip through your strict tenant screening process. This is why it helps to have a detailed contract and a strong legal team to help you out in case you have a problem tenant.
Drafting a good contract and finding yourself good tenants are not the only ways you can ensure that your property will be kept in excellent shape. You are responsible for the upkeep, maintenance, and repairs of the property itself. Make sure that you address maintenance and repairs asap. This does not only keep your property in tip-top shape but also ensure the safety of everyone in the property.
You have the responsibility to protect your tenant’s private information. You should be familiar with the General Data Protection Regulation (GDPR). It does not apply to your rights as a landlord only; it applies to your tenant’s as well. Don’t forget that landlords are also at risk for privacy issues, which is why it is wise to use a limited liability company for your protection. You can enjoy less visibility through the separation of your assets. This means that you can avoid being an open target to costly lawsuits in case of an unfortunate event.
There are other risks that you need to be aware of if you are a landlord. Knowing how to address each can help you increase your success and prevent huge financial headaches in the future.