Landlord Reality Check

Becoming a landlord isn't for everyone. "It's a full-time job," says Vito Simone, a broker at Simone Real Estate in Baltimore, Maryland. "You have to be prepared to deal with regular maintenance, emergency repairs, calls from tenants at all hours, and sometimes you'll have to give up your days off to work on the house." But the ultimate challenge for any landlord is finding agreeable tenants who will pay the rent on time. Your chances improve if you follow these guidelines.

Conduct a thorough background check on prospective tenants. Examine their credit; talk to former landlords and current employers, and, if possible, visit them in their homes. Order credit reports from one of the three major credit-reporting agencies: Equifax, 800-685-1111; Experian, 888-397-3742; and Trans Union, 800-916-8800.

Trust your gut. Someone may look great on paper, but if your personalities clash, you're asking for a world of hurt. Remember, you'll be sharing your home with this person.

Put it in writing. A signed lease protects both landlord and tenant if problems arise. The document should outline the term of the rental, the monthly fee, occupancy limitations, whether pets or smoking are allowed, deposit requirements, and who is responsible for general maintenance and utility payments.

Avoid the headache of screening prospective tenants, collecting rent, and fielding complaints by hiring a reputable management company. Most firms charge 7 to 10 percent of the monthly rent.

Don't be a do-it-yourselfer unless you're certain you can handle the job. Hiring a professional plumber or electrician should ensure the job gets done right the first time, keeping tenants happy and saving you the hassle of repeat repair visits.

Cover yourself. Purchase a comprehensive homeowner's policy covering losses caused by fire, weather, burglary, vandalism, and personal-injury claims. Also buy extended service warranties for appliances installed in rental units.

Anticipate the unexpected. Tuck 10 percent of each month's rent into a separate bank account to cover repairs related to the rental.
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