Bought a multi-unit with the intent to rent it out? Have a property that you’re not using? Did you just purchase your first investment property?
Then you are all at the same point - in need of tenants.
As a prospective landlord, there are several important steps you need to put in place before you start marketing the property and reviewing possible tenants. Having these done will not only make the process of searching for a reliable tenant easier, but you’ll also have the necessary safeguards in place to protect yourself if anything comes up. Landlords learned this the hard way during the COVID pandemic - some things are just out of everyone’s control so it’s important to plan for any possible scenario.
Understand Your Property
Type, zoning, options, etc.
First things first, understand the type of property you have and its possible usages for the tenant. By this we mean:
How is the property zoned? Residential, Commercial or Mixed Use?
Does the township or city have any restrictions on use or growth of the property/area?
Any requirements as a landlord that you need to follow based on the type of zoning and/or building you have?
For Residential Only Properties:
How many occupants can safely live here?
Are all safety requirements completed (i.e. correct number of smoke detectors, etc.)?
What are the accessibility limitations, and should that be changed/updated?
For Commercial Only Properties:
What feature(s) does the building currently have? For example:
A commercial kitchen (for restaurants & eateries)
A reception area and/or conference room (for offices)
A multiport garage (for mechanic shop)
A loading bay (for warehouse or large production companies)
Any insurances you need to have in place as landlord?
Tenants should have their own but as the owner of the property you may need separate protections in place.
How many businesses can be housed here?
For Mixed Use:
What percentage of the property is commercial? Then what’s left for residential?
What features lend itself to the types of businesses that could run out of the commercial area? For example:
Several sinks and stations (for barber, hair salon)
Separated kitchen area (for cafes & bakeries)
Shelving and storage areas (for retail)
How many occupants can safely live in the residential area?
Need to review protections, insurances and accessibility requirements for both sections, which means you may need to consider several packages
Written Contract & Policies
Things to keep in mind and how we can help
Once you have all of that out of the way, the next step is to build up your policies for usage of the property and a contract that goes with it that the new tenants would agree to and sign. When putting these together keep in mind:
Cost of ownership: taxes, insurances, utilities - landlord specific
Tenant responsibilities vs Landlord responsibilities
Restrictions & limitations of usage
Animal/Pet restrictions - your choice
How rent is to be paid?
Penalty for overdue rent
Type of contract: yearly commitment, month-to-month, etc.
How tenants can be released from contract
How landlord can be released from contract
HAVE EVERYTHING IN WRITING!!
If you’re doing it yourself, we highly recommend having a real estate attorney or Realtor work with you on this. It’s worth the fees associated as you know you’ll have the right verbiage and protections - which will hopefully lead to a successful investment experience. If you are teaming up with a Property Management Company, be sure to review any of the contracts and policies up front. Be aware of the terms and conditions and if you don’t understand something, ask. This is your investment: protect it!
Our team has years of experience handling real estate investments across Pennsylvania & New Jersey. We’ve worked with several different clients and have a portfolio of our own. Let us use our knowledge and expertise in property management and local real estate for your benefit!
Contact our team today!