what landlords do
as noted above a landlord is anyone who owns property and rents it out to someone else this party is called the tenant or leaseholder landlords invest in real estate as a source of financial profit by owning property and leasing it out a landlord can earn a steady stream of income along with the potential for appreciation of their properties landlords may be individuals businesses or other entities such as government agencies similarly the types of properties they own can also vary that means that the types of properties they own aren t limited to just homes in addition to single family residences their real estate portfolios may include landlords typically use leases when they rent out their assets a lease is a legally binding contract that outlines the terms under which one party agrees to rent property from another it guarantees the lessee or tenant the use of an asset and guarantees that the lessor the property owner or landlord is entitled to regular payments for a specified period in exchange there are some landlords who own property but aren t actually located on or near the property these entities are called absentee landlords being an absentee landlord can be risky for the property owner damage or a complete loss due to negligence or tenant misbehavior is an ongoing worry squatting situations can also arise without adequately monitoring and the eviction of tenants can be problematic landlord rights and responsibilitieslandlords have specific rights and responsibilities that vary from state to state however there are general laws common to all states property owners also have the right to collect rent as well as any prearranged late fees they also have the right to raise the rent as defined in the tenant landlord lease agreement when tenants do not pay rent landlords have the right to evict them the process of eviction also varies from state to state most states provide landlords with the ability to collect back rent as well as legal costs 1in 2019 oregon became the first state to implement statewide rent control placing a limit on rent increases and limiting a landlords ability to remove tenants without cause 2property owners must the landlord must also follow all local building codes perform prompt repairs and keep all vital services including plumbing electricity and heat in working order 3security deposit management is also a critical obligation for any landlord while landlords have the right to charge tenants a security deposit to cover both property damage as well as unpaid rent the deposit does not ever actually belong to the landlord rules and laws governing security deposit amounts and how they must be maintained these rules vary from state to state landlords who breach these laws could face legal consequences 4types of landlordsjust as the types of properties a landlord can own can vary so too do the types of landlords they may be individuals corporations or other entities such as government agencies individuals may own one or more properties and rent them out to supplement their incomes or as a way to diversify their investment portfolios for instance a middle aged couple may decide to purchase a second home and rent it out as a way to increase their monthly income keeping the property rented out during retirement can help these individuals supplement any money they receive from social security benefits or other investments other landlords such as corporations may actually be in the business of purchasing properties for the express purpose to rent them out for example a real estate corporation may purchase office buildings and rent them out to different businesses for monthly rent municipal governments especially those in large cities often own housing corporations these agencies own rent out manage and maintain affordable or subsidized housing rentals to those in need rental payments are commonly determined based on a tenant s income for these dwellings 5advantages and disadvantages of being a landlordlandlords have financial advantages and disadvantages when investing in a rental property among the benefits a landlord may leverage borrowed funds to purchase a rental property thereby needing a smaller portion of the total property cost to gain the rental income from the structure the rental property can secure this debt freeing up other assets belonging to the landlord use of leverage to purchase the propertytax deductible costsincome streampotential for appreciationvarious responsibilities of maintaining and managing the propertytaxes on capital gainstenant related hasslesunforeseen costsunique legal liabilitiesmost costs associated with rental properties are tax deductible if there is no net profit after expenses rental income is essentially un taxed income as the rental property mortgage is paid down landlords increase their ownership percentage of their property and gain access to the appreciation of value however when a landlord sells a property they will pay taxes on any capital gains unless they roll over the money into another rental property this process called a 1031 exchange has specific requirements the new property must be identified within 45 days of the sale and the full transfer must take place within 180 days 6limits on a landlord s rightsthere are four main things landlords aren t allowed to do discriminate thanks to the fair housing act the law strictly forbids landlords from denying a lease to someone based on race color national origin sexual orientation familial status disability or gender 7enter without proper notice unless it s for an emergency situation such as a fire or leak landlords must give proper notice before entering a property laws vary by state but many statutes require at least 24 hour notice evict tenants improperly a landlord may evict a tenant for several reasons but they must always go through the proper legal channels failure to follow proper protocol puts the landlord in a precarious legal position raise rents without notice landlords must give ample notice before increasing a tenant s rent typically that means a minimum of 30 days and depending on the state rent control laws might prevent landlords from raising rents above a certain limit even when the lease is up for renewal 