{"id":369188,"date":"2016-04-04T10:47:16","date_gmt":"2016-04-04T15:47:16","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/realestate\/landlord-tenant-law\/10-tips-for-being-a-low-risk-landlord.html"},"modified":"2023-08-09T09:14:13","modified_gmt":"2023-08-09T14:14:13","slug":"10-tips-for-being-a-low-risk-landlord","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/realestate\/landlord-tenant-law\/10-tips-for-being-a-low-risk-landlord.html","title":{"rendered":"10 Tips for Being a Low-Risk Landlord"},"content":{"rendered":"\n
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10 Tips for Being a Low-Risk Landlord<\/h1>\n
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\n By Melissa McCall, J.D.<\/a> | Legally reviewed by Katrina Wilson, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

As with any venture, being a landlord comes with benefits and risks. The chief goal of real estate investing is to generate rental income. Generating passive income can be challenging if a landlord constantly deals with tenant and property management issues, which can raise a landlord’s risk profile.<\/p>\r\n

Fortunately, there are ways landlords can minimize their risks. This article explores 10 tips to help landlords lower risk and avoid common landlord mistakes.<\/p>\r\n

Understanding Rental Property Ownership<\/h2>\r\n

Understanding rental property ownership can help landlords mitigate risk. Unlike real estate investment trusts (REIT), most landlords are small business owners. In a REIT, multiple real estate investors combine their money to invest in rental properties. This limits the risk to a sole investor, like homeowners who buy small buildings.<\/p>\r\n

Many rental property owners build their inventment portfolio one piece at a time. They often use a realtor who understands their local real estate market and home prices before finding the right lender. If they take out a mortgage, they must ensure the rental property generates enough income to cover mortgage payments. Many rental property owners attempt to increase the property’s value through renovations and repairs.<\/p>\r\n

Use a Written Lease Agreement<\/h2>\r\n

A written lease agreement is more than a binding legal agreement. Leases protect both the rental property owner and the tenant. They outline the duties and responsibilities of each party. Although oral contracts are legal in many states, they increase a landlord’s risk. A written agreement will control the outcome of a dispute between landlord and tenant.<\/p>\r\n

Many landlords are small business owners who may draft their own lease agreements to try to save money, but this often backfires. An experienced local real estate attorney can help them save time and money by drafting a legally sufficient agreement.<\/p>\r\n

Here are a few terms of the lease to include in a strong lease agreement:<\/p>\r\n