Leasing a real-estate property seems like a lucrative way of earning passive income. The process is fairly seamless when you want to rent out a single unit, such as a condo or bungalow. But when it comes to renting out an entire building, it’s a different ball game altogether.
From finding and managing multiple tenants to ensuring proper maintenance of the property – leasing a building is a complex task. On top of that, you have to negotiate appropriate lease agreements and ensure that you adhere to the federal, state, and local laws.
In the absence of a proper plan and management, renting out your building can quickly turn into a nightmare. That’s why we’ve outlined a few useful tips to help you get started. Let’s take a look.
1. Don’t Ignore the Basics
First things first – you need to determine whether you’re going to lease your building as a commercial or residential property. It’ll go a long way to influence the type of permits and insurance you need to obtain. Also, it’ll impact the type of taxes you’ll need to pay.
Next, you need to determine whether you have the necessary permission to rent out your property. If this isn’t the case, you should consult the local authorities to find out how to get the permit. The last thing you want to do is end up at the receiving end of lawsuits and penalties for violating state and local codes.
This is also a good time to go through federal, state, and local laws on property leasing. It’ll help you identify your responsibilities and liabilities as a landlord. If you aren’t particularly familiar with legal terms, it’s wiser to hire a legal advisor who can handhold you through the process.
2. Property Maintenance
Irrespective of whether you want to attract residential or commercial tenants, you need to maintain your property in top shape. To begin with, make sure you clear out any unit as soon as an existing tenant vacates. Make sure the unit is cleaned and repainted before you start showing it around to potential tenants.
Additionally, you need to schedule routine maintenance checks to ensure identify any structural flaws that need immediate repair. You should also consider getting the entire building repainted every couple of years.
If being a landlord isn’t your only professional commitment, it’s a good idea to hire an experienced property manager. From staying connected with tenants to carrying out routine inspections – a property manager will oversee the maintenance of your building.
3. Plumbing & Electrical
Depending on the type of lease agreement you negotiate, you might be responsible for getting electrical and plumbing repairs done. When you have busy tenants, electrical problems are not acceptable. Make sure you have a relationship with reliable commercial electricians who are capable of working on your type of building if a problem arises.
Before hiring a commercial electrician, make sure you check out their website and customer reviews. Once you contact them, ask for their license and insurance details. Also, make sure they have prior experience of working in similar buildings. Don’t hesitate to ask to speak to some of their existing clients.
Likewise, it’s essential to find a skilled and trustworthy plumber who can fix burst pipes and leaking faucets, whenever the need arises. Apart from relying on the internet, you could also ask around in your neighborhood to find referrals for experienced plumbers.
4. Finding the Right Tenants
This is likely the most essential step of renting out a property. It becomes all the more crucial when you’re leasing a building. Running background checks, assessing credit history, and checking criminal records for multiple clients isn’t easy.
The last thing you want is to end up with a tenant who refuses to pay the rent on time and even causes damage to your property. An easy way of avoiding such a scenario is to hire a professional real estate agent.
Working with a real estate agent ensures that you don’t have to rigorously vet individual tenants. Also, they can help you negotiate the right payment and lease terms. They could even assist you in drafting a proper lease agreement. It’s crucial for ensuring that you don’t end up in any legal disputes with tenants.
Whether you’re leasing your property for residential or commercial use, you need a team of professionals to help you in the process. Make sure you hire a property manager for the upkeep of your building after you rent it out. Also, it’s a good idea to forge a relationship with local electricians, plumbers, locksmiths, etc. You could even consider hiring a real estate agent to find and vet tenants.