Most investors know that owning a rental property comes with a long list of benefits. Despite the financial rewards, there are also some risks that need to be considered before you start investing or acquire a new property.
Fortunately, the risks and liabilities that come with owning investment property can usually be offset by good professional help and consistent policies and procedures.
Today, we’re talking about the types of risks you should be prepared for as an investor, and what you can do to minimize them.
Work With Licensed and Insured Vendors
When you hire people to work on your investment property who aren’t licensed, insured, or bonded, you open yourself up to a lot of liability. Sure, these workers may cost a lot less than professional vendors and contractors, but a lot can go wrong. They could get injured while fixing your roof or painting your house or trimming your trees. If they’re not insured, you could be liable for their medical expenses and additional penalties.
If an unlicensed worker makes a repair that ends up harming your tenants or causing further damage to your property, you’ll be left with additional expenses and the extra risk of lawsuits and claims.
Insist on seeing the paperwork that proves licensure, insurance, and workers’ compensation coverage before you hire anyone to make repairs or do work at your property.
Document Everything Pertaining to Your Dallas Fort Worth Rental Property
Written documentation, including photographs and videos, is essential to protecting yourself as a landlord. Good recordkeeping can help you avoid tenant disputes, court battles, and even innocent misunderstandings. Hold onto receipts, inspection reports, tenant notices, and maintenance requests. Ask for all non-emergency repairs to be made in writing so you can track the date the request was made and the work that was done. If you’re working with a professional property management company in Dallas or Fort Worth, they should have a software system that keeps all your documentation organized and accessible.
Make Sure You and Your Property are Insured
Insurance is a key point of protection when it comes to risk and liability for rental property owners. You’ll need to provide basic coverage for your property, which is insurance against fire, floods, tornados, and other catastrophic events. You’ll also want liability insurance that protects you in case someone is injured at your property. Look for additional insurance that will cover things like loss of income.
It’s a good idea to require renter’s insurance of your tenants. While your own policy will cover your property and liability, the personal items belonging to a tenant are not covered. If there’s a flood and a tenant’s computer or television is damaged, there won’t be any coverage unless renter’s insurance is in place.
Work with Professional Dallas/Fort Worth Property Managers
Professional property management companies can do a great job protecting you from risk and liability. With a property manager leasing, managing, and maintaining your property, you’ll avoid making potentially expensive legal mistakes. You won’t have to get into any emotional tug-of-wars with your tenants, and you’ll know that your property’s condition is being protected. It’s nice to have the extra buffer and the added protection.
We can tell you more about what it’s like to work with us and how to protect yourself from potential liabilities. Contact our team at McCaw Property Management.
