Becoming a Landlord in Texas
If you’ve ever considered becoming a landlord in Texas, there’s never been a better time. New residents keep flocking to the Lone Star State, creating a hot rental market — especially in Texas’ major cities.
There are several solid reasons for becoming a landlord in Texas, whether you’re downsizing yet want to hang on to the property or are looking for long-term, passive income. Plus, Texas’ landlord-friendly laws make renting property an attractive venture.
But success as a landlord will depend on preparation, management, and a little proactivity. Here’s what you need to know before becoming a landlord in Texas.
Weighing the Pros and Cons
As with most big moves, being a landlord in Texas comes with a list of pros and cons. When managed correctly, a rental property can offer landlords a diverse investment option, potential appreciation, federal tax benefits, and passive income. (The average rent in Texas is approximately $1,750, according to Zillow.) However, there are potential challenges that landlords need to be ready to face:
Legal Compliance
Understand the rules around deposits, late fees, and evictions before renting your property. The Tenants’ Rights Handbook, created by the Texas Young Lawyers Association and the State Bar of Texas, is a good place to start.
Property Maintenance
Landlords are responsible for ensuring the property is safe, secure, and code-compliant. This includes installing fire and carbon monoxide detectors and keeping up with typical home maintenance, including trimming trees and staying on top of the HVAC system.
Managing Tenants
Expect the unexpected — even with seemingly perfect tenants. Roofs leak, pipes burst, and payments are sometimes late. These are just a smattering of the headaches landlords sometimes face.
Finding the Right Property
Once you’ve decided to become a landlord in Texas, finding the right property is a must. Think about your personal goals. If you’re buying a property with the intention of renting it, you’ll want to consider the sale price, any updates it needs, and the area — all factors that can impact your return on investment. If you’re considering renting a property you currently own, ask yourself: Will I make more money as a landlord? Or will I make more money selling the property and investing the money?
Best Practices for Landlord Success
- Screen potential tenants. Run background and credit checks and verify a potential tenant’s rental history.
- Create a clear lease agreement. Include detailed information outlining rent due dates and penalties, as well as maintenance responsibilities.
- Stay on top of maintenance. Content tenants create fewer headaches for you — a rental win-win.
- Turn to the professionals. Some landlords hire property managers to help with day-to-day operations. Consider this route if you’ll be renting out several properties.
Thinking of dipping your toe into the short-term rental market first? Here’s what you need to know before listing your home on Airbnb.
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