1. Tenant Finances

Requiring your tenant to have a renters insurance policy will protect you in the event of a disaster. Most tenants live paycheck to paycheck. What would happen if your tenant’s posessions were stolen? Would they have the finances to replace everything and continue to pay rent on time? Requiring renters insurance protects you while protecting your tenant.

2. Protect Yourself from Liability

While your homeowner’s insurance may protect you from a lawsuit from injuries on your property, it may not protect you while a tenant is living in your home. It is both the <a href=”http://www.rentalinsurance.org/Resources/My-Responsibility-or-the-Landlords”>landlord and tenant’s responsibility</a> to maintain the property. This can make both parties liable if a guest is injured on the premesis. Rental liability insurance is included in most renters insurance policies.

Being a landlord is not easy. Take the steps necessary to ensure your investment is a blessing and not a curse.

About the Author: Matt Shealy is a perpetual real estate investor and writer. His love of homes and property started while growing up in the Apalachian Mountains and spread as he moved around the United States.

Top 40 Real Estate Objections

Zoning ordinance: The set of laws and regulations controlling the use of land and construction of improvements in a given area or zone.

Yield maintenance premium: A penalty, paid by the borrower, designed to make investors whole in the event of early redemption of principal.

Yield spread: The difference in yields between a commercial mortgage and a benchmark value, typically U.S. Treasuries of the same maturity.

Warranty Deed: A deed with the greatest protection as grantor warrants goods, marketable title, that he or she will stand by.

Weighted-average coupon: The weighted average of the gross interest rates of the mortgages underlying a pool as of the issue date, with the balance of each mortgage used as the weighting factor.

Weighted-average equity: The denominator of the fraction used to calculate investment-level income, appreciation and total returns on a quarterly basis, consisting of net assets at the beginning of the period adjusted for weighted contributions and distributions.

Weighted-average rental rates: The average proportion of unequal rental rates in two or more buildings within a market.

Working drawings: The set of plans for a building or project that comprise the contract documents that indicate the precise manner in which a project is to be built.

Workout: The process by which a borrower attempts to negotiate with a lender to restructure the borrower’s debt rather than go through foreclosure proceedings.

Write-down: The accounting procedure used when the book value of an asset is adjusted downward to better reflect current market value.

Write-off: The accounting procedure used when an asset has been determined to be uncollectible and is therefore charged as a loss.

Vacancy rate: The total amount of available space compared to the total inventory of space and expressed as a percentage.

Vacant space: Existing tenant space currently being marketed for lease excluding space available for sublease.

Value-added: A phrase generally used by advisers and managers to describe investments in underperforming and/or undermanaged assets. The objective is to generate 13 percent to 18 percent returns.

Variable-rate: A loan interest rate that varies over the term of the loan, usually tied to a predetermined index. Also called adjustable-rate.

Variance: Permission that allows a property owner to depart from the literal requirements of a zoning ordinance that, because of special circumstances, cause a unique hardship.

Virtual storefront: An online business presence for sales.

Under contract: The period of time after a seller has accepted a buyer’s offer to purchase a property and during which the buyer is able to perform its due diligence and finalize financing arrangements. During this time, the seller is precluded from entertaining offers from other buyers.

Underwriter: A company, usually an investment banking firm, that guarantees or participates in a guarantee that an entire issue of stocks or bonds will be purchased.

Unencumbered: Property that is free of liens and other encumbrances.

Unimproved land: Most commonly refers to land without improvements or buildings but also can mean land in its natural state.

Unrated classes: Typically the most subordinated classes of CMBS.

UPREIT (Umbrella partnership real estate investment trust): Organizational structure where a REIT’s assets are owned by a holding company for tax purposes.

Usable square footage: The area contained within the demising walls of the tenant space that equals the net square footage multiplied by the circulation factor.

Use: The specific purpose for which a parcel or a building is intended to be used or for which it has been designed or arranged.