While property managers may handle most of the daily operations that come with having rental properties, even the most hands off landlords still have some responsibility. At a minimum, you owe it to yourself to reduce your liability as much as possible. So what do you need to do in order to reduce your liability?
What You Need to Reduce Your Liability as a Landlord: General Liability Insurance
As the owner of the property, you are responsible for the general safety of those on the premises, whether they live there or not. Even if you do everything you’re supposed to in order to maintain the safety of the property, people can still get injured and may sue you for it. General liability insurance helps protect you by helping you pay for the associated expenses. As with any insurance policy, it’s generally considered a good idea to shop around and make sure you clearly understand what is or isn’t covered before signing on.
Setup Your Business Properly
Make no mistake, as a landlord, you are a business owner. As such, it’s important to make sure you structure your business properly. This is essential to keeping yourself, your personal finances, and your personal assets safe. An LLC will insulate your personal finances from your real estate properties. That way if you end up being sued by a tenant, they can’t access your personal property to settle the suit. This protection is built into the LLC structure, whereas as a sole proprietor you have no such protection built in.
What You Need to Reduce Your Liability as a Landlord: Well-Written Lease Agreements
Your lease agreement should clearly define what your responsibilities are as a landlord and what falls under the responsibility of your tenant. Don’t assume anything here. Everything should be explicitly stated so there is no confusion. There are standard clauses and terms that should be included, but there are some others that you might not think of. Clauses limiting guests, explaining who is responsible for utilities, their overuse, or malfunction, explaining property inspection protocol, disclosing fees, how any furnishings are to be used or protected, and requiring written permission to sublease are also critical. If you want your lease to protect you, spell everything out clearly.
Taking steps to reduce your liability as a landlord is an important part of being in the real estate business. At a minimum, you should carry general liability insurance, make sure your business is structured properly, and have well-written lease agreements. This will help protect you and your assets in the event of a lawsuit so you are in a better position to defend yourself and your business.
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See you at a meeting soon!
The Southwest Florida Real Estate Investment Association is the leading source of SWFL real estate investing events that provide investment education and networking in southwest Florida. We analyze the housing market and foreclosures and provide information, education and networking events in order to build a network and knowledge base for investors and potential investors. Our members include real estate agent, brokers, investors, hedge fund managers, rehabbers, wholesalers and more.
Our SWFL REIA General Meeting is held in Fort Myers where we provide education on hot topics in investing and an opportunity to enjoy the camaraderie of your fellow investors. You’ll get a chance to ask for advice from successful real estate professionals and even make a few deals on your latest projects.
To become a member, anyone can register as an individual, a couple, or a corporation. Being a member opens the doors for endless networking opportunities, advice from members with decades of experience, new ideas from entrepreneurs, camaraderie with those just beginning, and deals and contracts done in the meeting room. For those interested in Cape Coral rental property investment and/or Fort Myers rental property investment, SWFL REIA will be able to provide a network to help launch a successful investment career.
The SWFL REIA is known and respected as a source of current, actionable and useful information about the housing market in the area that we meet.
We meet twice a month.
One of the premier sources for real estate investing networking and education is the SWFL REIA. In the real estate world, the SWFL REIA is different in that they do not do information product sales. Their meetings are focusing on the best ways of investing in real estate by collaborating with other property investors who are sharing their experiences.
We look forward to meeting you at a meeting soon!
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