Buying your first rental property is a monumental achievement for most people and the start of building a great real estate portfolio. It’s no easy feat to be a successful landlord. 

To help you avoid common (and often expensive) mistakes, we’ve gathered the top things successful landlords wish they knew before buying their first rental property. 

If you’re considering investing in a rental property or have just walked away from closing on your new property, you’ll find these tips enlightening and helpful. 

Skyrocket your success and start earning passive income from your rental property thanks to these successful landlords’ advice! 

1. Start as Early as Possible

Seasoned investors persistently advocate for diving into the real estate world at the earliest opportunity. Don’t let the fear of making the wrong move, an instance of analysis paralysis, hinder your ability to take action and accumulate wealth.

The sooner you integrate yourself into the property investment game, the sooner you can begin reaping the benefits.

By buying rental property, you’re not just making an investment; you’re building a financial foundation for your future. The rental income you’ll generate can be a significant contributor to your wealth.

So, cut through the apprehension and jump in. There’s wealth to be built, and it’s waiting for you.

2. Open an LLC

When you make the leap into becoming a rental property owner, it’s a wise move to open a Limited Liability Company or LLC right from the start.

By setting up an LLC, you’re protecting your personal assets from any possible legal action taken by tenants.

On top of that, doing business under an LLC can simplify your tax filings and expense tracking, making the financial side of being a landlord more manageable. The IRS doesn’t view an LLC as a separate tax entity either, which means no corporate taxes to deal with.

Essentially, it’s a win-win for your investment.

3. Verify Current Tenants Are Paying Rent

One of the best situations for a first-time landlord is purchasing a rental property with tenants already living there. It’s a fantastic opportunity to kickstart a rental business, but there’s an essential step you shouldn’t skip! 

Make it a priority to request proof from the current owner that their tenants are up-to-date on rent. This protects you from inheriting a property with problematic rent collection, such as tenants that are several months behind.

The last thing you need is to jump into a risky eviction process, costing you time, money, and potential income.

Knowledge is power, and in this case, it could save you from unnecessary hassle.

4. Account for Increasing Property Taxes

Never overlook the potential increase in property taxes when you’re mapping out your future expenses. No matter how appealing that rental property looks, it can flip into a liability if taxes shoot up unexpectedly.

As a property market flourishes, tax assessments often follow suit. So, when conducting your affordability analysis, it’s smart to factor in gradual tax hikes.

Build some wiggle room into your budget for this inevitable expense, ensuring it won’t eat away your profit margin.

Remember, proactive planning for tax increases can be the difference between a profitable investment and a money pit. 

5. Write a Solid Lease Agreement

Giving ample time to craft a rock-solid lease agreement is a piece of sage advice for new landlords.

This document maintains order, specifying essential ground rules your tenants must adhere to during their stay. Stay clear of basic online templates, as they can be overly simplistic and miss the nuances of your particular rental situation.

Instead, lean on the knowledge of a legal professional or an experienced property manager to assist in writing this important agreement. Once perfected, you can use this bespoke lease repeatedly for various tenants. 

6. Build Relationships with Contractors & Vendors

Trustworthy handymen and dedicated service providers are the backbone of a smooth-running property operation. Having dependable people to fix problems as they arise can greatly reduce stress and, in some cases, even save you money.

From plumbing nightmares to roofing damage, these experts ensure quick and effective resolutions.

Remember, investing in good contacts isn’t an unnecessary luxury – it’s a strategic move. You’ll thank yourself later when an emergency strikes and help is just a call away.

7. Screen Tenants Extensively

All seasoned real estate investors emphasize the importance of meticulously screening potential tenants. The bitter truth is not all tenants are created equally.

Therefore, as a new landlord, it’s essential you establish a rigorous process that involves verifying references, scrutinizing credit reports, and implementing in-depth background checks. You’d be surprised at the wealth of information you can uncover through these measures.

This strategy isn’t just about weeding out problematic individuals; it can also significantly reduce instances of late or missed rent payments, ultimately saving you significant headaches and potential financial losses in the long run.

8. Research Local Rent Laws

Don’t underestimate the importance of knowing your way around federal, state, and local laws regarding rent and landlord-tenant relationships! As a landlord, it’s crucial to familiarize yourself with these regulations to run your rental property smoothly.

These laws will guide you through the ins and outs of renting, from security deposits to evictions to maintaining the condition of your property. A thorough understanding of these laws will not only help to fend off possible legal disputes but it’ll also help you stay clear of any fines.

Stay informed, and stay protected!

9. Property Management in Anne Arundel County, MD

As a rookie landlord in Maryland, it’s crucial that you consider engaging the services of a reputable Anne Arundel County property management company like Mainstay Property Management.

Managing a rental property isn’t a walk in the park. You’ve got daily responsibilities to juggle, maintenance concerns to address, and the nitty-gritty of acquiring tenants to handle, not to mention sorting out repair coordination.

It’s easy to become overwhelmed, but a reliable property management company in Anne Arundel County can take that load off your shoulders.

The Mainstay Team has the skills and experience to manage all these tasks efficiently, enabling you to focus on other things. Plus, it’s not just about convenience.

Having professionals handle your property management tasks can significantly increase your return on investment. We know how to keep tenants happy, handle issues promptly, and maintain the property’s value.

Experience less stress and maximize returns with Mainstay Property Management today! 

If you enjoyed this article, make sure to read 8 Ingenious Tips to Attract Long-Term Tenants next!