A landlord is a person or business that owns and rents real estate to another party in return for payment. They are also known as a “lessee” or lessor”, while the entity renting the property is called a “tenant” or “leaseholder”.
Landlords and tenants are typically bound by a lease agreement, which is a legally binding contract that defines the conditions which both parties must keep to. This specifies their rights and responsibilities throughout the duration of the lease, as well as the legal consequences in case these obligations aren’t kept to.
During a rental period, landlords generally provide the required maintenance or repairs, and the tenant is entrusted with caring for the property and keeping it clean. Read on to understand what it means to be a landlord and the pros and cons of this type of business activity.
Pros and Cons of Being a Landlord
Being a landlord has many perks, but it also brings a series of challenges. Before considering whether to rent out a property, it’s important to carefully consider what advantages and disadvantages come from this kind of endeavor.
Below are some of the most relevant pros of being a landlord:
- Extra income from rental payments.
- Tax deductions due to depreciation, mortgage interest, business deductions, or property costs.
- Appreciation and increase in value of the property over time.
And here is a list of the most common difficulties to leasing out a piece of real estate:
- Time spent finding, screening through a rental application, and communicating with tenants.
- Time spent collecting deposits and rent.
- Time spent filing evictions.
- Costs from advertising and showing the property.
- Extra expenditures due to the coordination of maintenance and repairs.
- Risks and liabilities from renting the property.
- Lack of liquidity due to the long-term nature of a real estate investment.
- Lost revenue from vacancies.
How Do Landlords Choose Tenants?
When choosing a tenant for their property, landlords typically take into account many different factors. This is because it’s important for property owners to determine the likelihood that the lessee will keep to the conditions of the rental agreement.
Landlords typically ask potential tenants to fill out a rental application to provide them with information about a variety of relevant factors.
Below you can find a list of the main points that landlords ask for when tenant screening:
- Full name
- Email address
- Phone number
- Emergency contact information
- Current address
- Rental history
- Employment history and income
- Credit history
- Consent to a credit check
- Personal references from former landlords, neighbors, and other parties
- Background and criminal check
What Rules Must Landlords Follow?
There are various rules governing tenant and landlord lights within a lease agreement. These laws can vary from state to state, but in every case, there are legal protections varying in degree and specification.
- Landlords are not allowed to discriminate against tenants on the basis of race, gender, nationality, religion, disability, or any other characteristic protected by Civil Rights laws.
- Security deposits must be returned by landlords within the time period prescribed by state law.
- Landlords must correctly follow eviction procedures.
- The property must be maintained habitable and safe by the landlord.