As the housing market continues to recover, you may hear about renting mavens that capitalize on the increasing rental market. Renting can be a great way to make some extra income, but it’s important to consider the appropriate preparations before you get on board. If you are thinking about renting out your home, here are some tips to consider.
1. Know the Laws
Not every state operates with the same landlord and tenant laws so be sure you know the laws that will govern your property before listing it. Your neighborhood may also have rules about rentals. Not only is your responsibility a huge obligation, but there are legal implications involved in becoming a landlord. It’s a good idea to study up on your rights and what you can or cannot demand from your tenant.
2. Create a Contract
A simple lease with the accurate legal jargon drawn up can go a long way in protecting you. It’s a good idea to have every adult who will be living in the home sign the document before moving in. It should include details about the lease term, security deposit, due dates for rent, maintenance responsibilities, rules of behavior and eviction terms. This can save you thousands in court fees in case something goes wrong.
3. Screen Tenants
You don’t want just anyone renting from you. It’s important to take the time to create an application with the basics like full name, employer, salary, any previous rentals and landlords in addition to references. You will also need prospective tenants’ Social Security numbers to conduct a background check and get their authorization to run a credit check. You should also consider going the extra mile and meeting them. (An alternative is to hire a professional property manager; you will have to pay a fee, but many people choose to do it that way.)
4. Determine Market Value
Figure out the monthly costs of becoming a landlord and learn what other rental properties in your area are charging. You know potential tenants will be searching around for the best deal, so it’s important to set a competitive price and highlight what makes your home desirable.
5. Protect Your Belongings
When you are renting a property, you are often exposing some of your possessions to nearly complete strangers. Evaluate your belongings between tenants so you be aware of any damage. Be sure you have appropriate insurance coverage, and encourage tenants to buy renter’s insurance to cover their own belongings.
6. Consider What It Really Means
Making money from renters can provide a serious income boost, but it’s important to consider whether you can comfortably manage the responsibility. Becoming a landlord means you have to respond to renter questions and concerns promptly. While you may be willing to wait months to fix a broken door in your home, a renter may not be. It’s a good idea to consider whether you want the added responsibility and time commitment that comes with becoming a landlord.
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