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Starting out as a landlord involves overcoming challenges. Our “How to Become a Landlord in California” post shows you how to succeed as a new landlord in California.

How To Become A Landlord In California

Before reading about becoming a landlord in California, check out our post about How to Make Millions with Rental Properties.

CBS News recently published a piece about “9 Things to Consider Before Becoming a Landlord”. They pointed out that becoming a landlord involves:

  • Understanding the time and financial commitment involved;
  • Setting aside money for expenses; and
  • Knowing how to deal with tenant problems.

Good suggestions, but you need more. Such as knowing your upcoming challenges includes:

  • Finding and screening tenants;
  • Creating a solid rental agreement;
  • Dealing with deposits;
  • Collecting rents; and
  • Complying with local, state, and federal laws.

Check out our post How to successfully manage your rental property for more tips.

 

Ask Yourself These Questions About Becoming a California Landlord

Becoming a California Landlord

As pointed out above, renting properties and managing tenants require time and money. Ask yourself these questions to see if you succeed as a housing investor:

  • Do I have the time to manage my rental properties?
  • Am I organized?
  • Do I make repairs myself or do I need a professional?
  • Can I deal with difficult tenants?
  • How do I learn about California landlord-tenant laws?
  • What are my tax obligations?

Can You Handle These Types of Landlord Tasks?

Even if you answered the above questions positively, can you handle typical landlord tasks? Here are some of them:

  • Placing ads for new tenants;
  • Showing your rentals to prospective tenants;
  • Separating deadbeats and vandals from your tenant applicants;
  • Completing legal lease agreements;
  • Collecting security deposits and rents;
  • Making and enforcing rules;
  • Avoiding equal housing problems;
  • Avoiding getting sued for tenant and guests’ injuries;
  • Dealing with insurance issues;
  • Handling repairs and tenant damages;
  • Observing local and California landlord-tenant laws;
  • Tracking tax write-offs and keeping books; and
  • Maintaining proper year-end tax filing records.

 

How To Become A Landlord In California

Landlord In California

Follow our 12 suggestions on how to become a landlord in California.

 

1. Treat Your Rental Properties Like A California Landlord Business

 

First-time landlords must treat renting properties like a business. Managing your rental properties may only be your part-time hobby after your full-time day job. But, it’s still a business.

Your new source of extra income requires acting professionally with your tenants. Also, keeping your finances and record-keeping in order. That’s where a good bookkeeper and accountant will help you. WeLease provides our landlords with bookkeeping services.

Obey all local, state, and federal laws about rentals. WeLease also helps you with understanding these housing rental laws.

Get used to the many regulations that come with rental investments, especially housing. You must research all laws and regulations before buying housing investment real estate. Hiring a good local real estate lawyer and following his or her advice becomes essential.

Avoid liabilities and lawsuits. Don’t get sued! Check out our post about Landlord Liabilities.

Also, read our post about Different Insurance Policies for Landlords.

 

2. Treat Your Rental Properties With Care

 

Keep your rentals and buildings well-maintained to prevent accidents and problems. Treat your rentals like your home. Fix everything right away. Don’t wait for an accident to happen.

Before you rent out a home or a unit double-check its safety. Make sure everything meets all code requirements. Spend money to make sure everything works. Inspect safety features like:

  • Check the wiring and plumbing;
  • Test the smoke and monoxide detectors;
  • Check external and internal pipes for combustion; and
  • Make sure all vents are free of buildups (like moisture, dirt, and debris, etc.).

 

Create a Plan for Emergency Repairs

After your tenants move in, plan for immediate fixes for dangerous problems. A call may come late at night or on a Sunday or holiday from a tenant reporting an emergency. What do you do? Plan for problems like:

  • How to help tenants who lock themselves out?
  • Fixing a furnace when it breaks;
  • Calling a reliable electrician or plumber 24/7 for dangerous emergencies (like flooding or flying sparks from wires, etc.); and
  • Making a list of reliable plumbers, locksmiths, electricians, and contractors available 24/7.

 

3. Set The Right Rent Price

 

No one wants to pay more than what a home or unit is worth. That’s where setting a fair market rent price comes in. Your rental market price depends upon:

  • The rental (home, apartment, condo);
  • Location (poor or desirable neighborhood);
  • Size (square footage);
  • Number of bedrooms and bathrooms; and
  • Amenities (pool, BBQ area, nearby schools, parks, shopping, etc.).

Setting the right rent price also means keeping in mind how it affects your profits. You need to compare your rental income with your rental expenses. Like any business, you must figure out your potential profits after expenses.

Fixed Expenses: like your mortgage payment, insurance fees, property taxes, and Homeowners Association (HOA) fees.

Variable Expenses: include repairs, utilities, and property improvements.

Comparing fixed and variable expenses to your rental income makes it easier to predict your profits from your set monthly rents.

 

4. Finding Tenants Online

 

Yes, the best and fastest way to find tenants is online. According to The Balance Small Business, most tenants find their new homes by searching online. Thus, the most effective way for you to find tenants involves creating online rental listings.

Your online rental listings must tell potential tenants what they want to know. Tenants want to know:

  • The rental price;
  • The number of bedrooms/bathrooms;
  • Location;
  • Amenities;
  • Nearby schools; and
  • Local attractions.

Upload high-quality photos of the common areas, every room, view, and the building. You want your future tenants to visualize the space. Showcase the best features in your photos.

 

5. Screening Tenants Like California Landlords Do

 

Tenant screening allows you to find quality tenants who pay the rent promptly and take care of your property. When you receive mountains of applications you need to find the best. A tenant who:

  • Pays fully every month;
  • Won’t wreck your property;
  • Won’t misbehave;
  • Doesn’t create problems with the neighbors; and
  • Maintains a good rental background.

Be careful of violating California and federal fair housing laws. Learn about them in our post, California Fair Housing Laws 2020.

For more information, read our post How to Screen Tenants.

Also, check out our post How to Evict a Problem Tenant in California.

 

6. Requiring A Rental Application

 

A proper rental application gives you important information about your potential tenant. You need to know:

  • Full name;
  • Current address;
  • Reason for moving;
  • Employment details;
  • Income;
  • Pets; and
  • Landlord references.

You need to ask all the right questions. This information helps you to decide which applicant will live on your property with the least problems.

 

7. Credit and Background Checks By California Landlords Avoids Bad Tenants

 

A credit check provides a fast way to see if an applicant is financially responsible or not. A background check provides more information about the tenant as a person.

After completing the credit and background checks look for these red flags:

  • Bankruptcy filings;
  • Notable debt;
  • Undue payments; and
  • Prior eviction history.

Selecting an applicant with a solid background and financial history assures you the rent gets paid fully and treats your property with respect.

Read our post to learn How to Evaluate a Prospective Tenant’s Credit.

Also, our How to do Tenant Background Checks.

 

8. Renters Insurance Protects California Tenants

 

Face it, we live in a lawsuit-happy country. Requiring renter’s insurance helps you to avoid lawsuits when your tenants’ belongings get damaged.

The relatively low cost for renter’s insurance won’t burden most tenants and gives you peace of mind.

 

9. A Solid Written Rental Agreement Protects California Landlords

 

Your written rental agreement must protect you. Oral agreements don’t protect you.

Getting all promises in writing along with expectations, rights, and duties protects both parties. You promise to provide rental property meeting all code and safety standards in a livable condition. Your tenant promises to pay on time and keep your property well-maintained.

A good rental agreement allows you to set the rules. For instance:

  • Monthly (or another calendar system) rent price;
  • When rent payments due;
  • Penalties for late payments;
  • Security deposits and how they get returned;
  • Restrictions (like pets, smoking, excess noises, premises usage, extra persons, etc.);
  • Landlord inspections (including Notice of Entry requirements);
  • Who pays for breakage of landlord provided furniture, appliances, etc.;
  • Maintenance and repairs;
  • Emergencies; and
  • HOA regulations (if applicable).

For more information, read our post What to Include in Your California Lease Agreement.

 

10. Enforcing the Rules

 

You must enforce all the rules. Otherwise, you lose respect from your tenants and your rules lose importance.

For instance, you must enforce the late rent fee penalties after a written grace period.

Read our post to learn about What to do when your California tenants pay rent late.

 

11. Collecting Rent Payments

 

We published a post here about the ways to collect rent including online. We recommend you read our post titled How to collect rent payments (online and offline methods).

Our post provides several ways to collect rent payments.

 

12. Keeping Good Records

 

You must keep good records of everything. This includes:

  • Rental application;
  • Credit and background reports;
  • Lease agreement;
  • Security deposits and receipts;
  • Rent receipts,
  • Repair and maintenance receipts; and
  • All written communications with each tenant.

 

Conclusion

 

Our how to become a landlord in California suggestions boils down to simple actions. The best ways to manage a successful rental property business amount to:

  • Acting professionally;
  • Always keep your finances in order;
  • Follow your city and California laws;
  • Protect yourself from liability; and
  • Prevent tenant problems.

 

Save Yourself Time, Money, and Stress

welease

Managing your rental property business takes time, money, and causes stress. Finding and screening tenants, collecting rents, and dealing with tenant problems might be too much for you. Hiring a California Property Manager solves these problems.

WeLease is here to relieve you of the time and stress of managing your rental properties. Let us manage your rental properties in the Greater San Diego area. We’ll do all the landlord tasks because that’s what we do.

Contact us today to learn how we make your landlord experience less stressful and more profitable by saving you time and money.

 

Steven Rich, MBA – Guest Blogger

 

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