Buy, Sell & Rent

Managing investment property takes a keen understanding ofhousing laws and regulations. Here's what you need to know before you take the plunge.

show up late for work may not pay their rent on time, either.”

Jeffrey Taylor, who runs the MrLandlord.com Website, says that landlords need to go beyond an applicant’s financial picture to get an idea of how cooperative an individual would be as a tenant. “Ask a prospective tenant how he or she gets along with the current landlord. If you hear bad-mouthing, that’s a bad sign, because problems tend to go along with the same people. Also, before you accept new tenants, look at the place where they’re currently living. That’s what your place will look like in six months if you rent to them.”

Even if you hire a property manager, you should not abdicate responsibility for selecting tenants. “My manager would send me a packet of information to review,” says Jordan. “My approval was necessary before a contract was offered to a tenant. Sometimes I would turn down an applicant if I felt uncomfortable.”

Join the network. One key element, then, is to come up with an application that will allow you to screen out potential problem tenants without running afoul of any laws. “A local landlords’ association probably can help by providing model applications as well as sample lease agreements,” says Taylor. “Most of these groups welcome people who are interested in becoming landlords, even if you don’t yet own any properties.”

Gibson, too, says that joining a landlords’ association is a vital first step. “Tenants have various advocacy groups on their side, including Legal Aid,” she points out. “You need support too, which you can get through a landlord group. You can learn everything from how to advertise correctly in the local newspaper to how to prep your place properly to give it curb appeal.” Even if you join a local organization, Gibson suggests a trip to the bookstore for how-to help, specifically mentioning Every Landlord’s Legal Guide (Nolo Press; $44.99), of which Portman is co-author.

Build your own network. Taylor advises landlords to put together a team of experts who can be relied upon. “You should know a dependable contractor for any work that needs to be done as well as a real estate agent,” he says. “You don’t have to have a lawyer on retainer, but you should have some names to call when you need legal advice.” Dennison asserts that it’s worth paying legal fees, from time to time, if it helps you avoid fines that can be much steeper.

Also on your team should be a tax professional and a banker. “If you want to purchase property, knowing a cooperative lender may allow you to move quickly,” Taylor says. “Ideally, all of your team members will own investment properties themselves, so they’ll be familiar with the situations you might face and will have proven strategies to recommend.”

Cover your assets. Every landlord’s worst nightmare is winding up on the wrong end of an injury suit and having to pay a huge award for damages. “You need the right kind of insurance,” says Portman. “As a landlord, you

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