If you have a real estate IRA and are ready to rent out your property the following are a few tips to help protect your property. Of course each situation might call for going with some of these tips, or none of them, but overall these tips should be taken into consideration to make sure you have your bases covered.
Hire a Management Company
Hiring a management firm isn't for everyone but here is what a management company usually gets paid to do: find a tenant- which includes the advertising and the background checks. Managing the property- this includes most of the things you probably don't want to do like collecting the rent and charging late fees to handling repairs and dealing with early vacancies and evictions.
When choosing a management company make sure to choose a company that is a licensed professional. To find a professional near you check out NARPM. One important thing that the management company does is that it takes out the emotional aspect of being a landlord. They are the ones at the end of the day that need to collect the paycheck. Lastly, the rest of the tips that are mentioned can for the most part be done by the management company.
Find a Good Tenant
A great way to find a tenant is to advertise in local newspapers, both in print and online. Never forget the power of word of mouth and spread the word through everyone you know.
It is important to have potential tenants to fill out an application form, listing their basic information: name, employer, salary, previous landlords and references. It is also very important for any landlord to do a background check. For these checks you'll need their Social Security number and signed authorization to check credit reports and criminal history. This can also be done by an online agency and as always make sure your company is accredited. Do this by checking the BBB.
Charge the Correct Rent
It is important to to be at the correct price point for your rent or you may never see the tenant you are hoping for. To do this check rent amounts around your property. Check newspapers or online resources for prices. Remember, be realistic and that may mean having a lower rent than what your mortgage is.
Quality Written Lease
This is one thing you will want to make sure you get right. You may want help from a real estate lawyer that has experience in creating leases. Some of the things your lease should spell out are:
- Lease Term
- Security Deposit
- Due dates and late penalties
- Who is responsible for what (repairs, upkeep like lawn care, homeowners fees, ect.)
- Behavioral rules like smoking and noise level
- Pet policies
- HOA rules that tenant must follow
- Eviction terms
Home insurance for a rental property is different than home insurance for a home you live in. Make sure you are getting rental property insurance. This typically covers the structure, legal costs, medical expenses, rental income loss and repairs.
These are just a few tips to help you on your way to renting your property from a real estate IRA. In regards to the self directed IRA in real estate you must make sure you are following correct rules. Contact us today to talk more about how to get invest your IRA into real estate or to talk about more of the specific real estate IRA rules.
Author: Nick Barker.