There are many different reasons why someone may choose to rent out their home versus selling it when they decide to move. Whether considering a long-term tenant or short-term options such as Airbnb, renting your house can provide a significant amount of additional income each month.
This article will help buyers who are looking for investment property by providing tips and tricks on how to successfully rent out your home. Additionally, it will give those looking to sell another option, one that could turn out to be quite profitable.
There are certain scenarios, however, where renting out your house may not be the best option. For example, if your area only allows for a certain amount of monthly rent to be charged, but your overall costs (mortgage, property taxes, insurance) are significantly higher, then it may not be in your best interest to rent out your property at that time.
Understand The Responsibility
Renting out your house is an opportunity to make some extra money. You can either rent it for a short amount of time or you can have someone live in your house for a long time. When renting it, there are two things to remember:
- You need to make sure that the person who lives there pays you on time or else they might not be allowed back
- You are responsible for the upkeep of the home. You are now required to have all utilities paid, including electric, water, gas, internet, cable. If you don't do that then it could cost you more in the long run.
- You also need to remember that if someone damages your property while they are living there, you will be responsible for it. You can take out a landlord's insurance that would protect you in this scenario.
Get The Home Prepared For Rent
If you have decided on renting your home, you will want to get the property ready for prospective tenants to view. Some things to do before renting include:
- Clean the house from top to bottom- This includes making sure all cobwebs are removed, all surfaces are dusted, and all floors are vacuumed and mopped.
- Repair any damage that may have occurred since you last lived in the home.
- Make any necessary updates or repairs- If the carpeting is looking worn down, if the paint is peeling, or if there are any other major repairs that need to be made, make them before you start advertising the home.
- Ensure appliances are in good working condition - If you are renting your home with appliances, make sure that they are in good working order for when the tenant moves in.
Market The Home
When marketing your home, it is important to list all of the features that make it desirable. Some features that may attract tenants include:
- A well-maintained yard
- A large kitchen
- Ample parking
- Close to public transportation
When putting together the remarks for your listing, it is important to use descriptive adjectives that will help potential tenants imagine themselves living in the space. Words like "spacious," "cozy," and "luxurious" can help to make your home stand out from the rest.
Finding The Right Tenants
Finding the ideal tenant for your property may feel daunting, however, there are certain things you can do to help this process along. From background checks to personal interviews, putting in the work to properly vet potential tenants is crucial to having a positive renting experience.
Where Can I Find Tenants
- The internet is a great place to start when looking for tenants. There are a number of websites that allow you to post your property for free and to search through a database of potential tenants.
- Another option is to work with a real estate agent. They have access to a large network of potential renters and can help you find the best tenant for your property.
- You can also post flyers in local businesses or postcards in local mailboxes. This can be a more time-consuming process, but it can be effective if done correctly.
I Found Some Tenants Now What
When renting out your house, it is important to find tenants who will respect your property and pay rent on time. This is why it is crucial to perform a background check on all potential tenants. A pre-screening is used to determine if a tenant is qualified for the property. This screening typically includes the following:
- A review of the tenant's credit history
- A criminal background check
- A check of the tenant's rental history
- An interview with the tenant
By performing pre-screening, you can rest assured that you are only considering qualified candidates who are likely to be good tenants.
Other important things to look into when considering prospective tenants include:
Gross monthly income
It is important to confirm that those applying to rent your property will comfortably be able to afford the amount of monthly rent.
Favorable credit score
A good credit score will be a great indicator that the tenant is reliable and pays their bills on time.
Employment—with acceptable proof (i.e., pay stubs) of the required monthly income
Confirmation that the applying parties are employed and that they are currently making the amount of money they have indicated. An important note would be how long have they been at their current place of employment.
Good references from all previous landlords
If a tenant has had several landlords, you can contact each one to ask about the quality of their tenant's behavior. Questions to ask may be:
- Has the tenant always paid their rent on time?
- What was the state of the house/unit at the time they moved out?
- How long did the tenant live there?
Agree to the total number of occupants allowed (e.g., two per bedroom per state law).
You will want to ensure that your prospective tenants don't have any unapproved occupants, as they may pose a liability on your part and/or affect the condition of your property.
Navigating The Financials
When it comes to calculating the rent you will charge for your home, it is important to do your research. You want to make sure that you are charging an amount that is fair and reasonable, while also making a profit on your investment. To get an idea of what other people in your area are charging, it is helpful to consult with a real estate professional. They can help you compare your home to others in the area and give you a realistic idea of what people are willing to pay.
It is also important to remember that, as a landlord, there are certain costs that you will incur each month. These costs include mortgage payments, property taxes, insurance premiums, and repairs/maintenance expenses. When setting your rent price, you should take these costs into account. If your monthly mortgage, taxes, insurance premiums, and necessary repairs/maintenance are lower than the amount you are charging for rent each month, then you will be losing money.
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