Owning a home gives you the luxury of investing in a property that is more than likely to appreciate over time. What’s more, you have the option to rent out the home whenever you don’t need it – such as through AirBnB – and collect a pretty penny. You could be relocating for work, traveling for a while, or perhaps downsizing after the children flee the nest. Any of these reasons could allow you to find someone to occupy the home for an agreed amount depending on the area’s market rate This money can tidy you up if you are on a fixed income and help you keep up with the mortgage payments. As easy as it sounds, there are essential responsibilities that a homeowner must take care of before renting out their property.
1. State Laws
The first course of action for homeowners wishing to rent their property is familiarizing themselves with the landlord-tenant laws of their location. These laws differ from one state to the next, and they include complex guidelines to the seemingly mundane. For instance, some states prohibit entering the leased space without a 24-hour notice or risk getting into legal trouble. This law effectively takes away the urge to drop in on your tenant to see how they are handling your beloved home. Privacy issues aside, you may accidentally break something that doesn’t belong to you, and your tenant could sue you!
2. Screening Tenants
Having rented out space sometime in your life, you can appreciate the fact that tenants can be a handful sometimes. There are endless complaints about the home or apartment, and tenants’ behavior can be a nuisance. More so, some people are not keen on honoring rent payments until they are reminded one too many times. Homeowners need to screen many prospects before settling for the most suitable tenant and do a thorough background check. Naivety and rushing to start hauling in money are common pitfalls that occur to homeowners. Ask potential tenants to fill out application forms with pertinent details such as employer, income, previous landlords, etc. You will also need their Social Security number and a signed document explicitly allowing you to perform a credit check. This process may be tiresome, but even the slightest bit of oversight could launch unnecessary problems down the line.
3. Asking Price
Irrespective of your motivations for renting your home, don’t be tempted to undervalue your property to get a tenant. On the other hand, overpricing way above comparable market price in your area is bound to put off prospective tenants. Check the local listings for similar homes or apartments in the area as the “comms” are what determine the rent. You can find this information freely on real estate websites, rental signs in the area, or in the local dailies. Speaking to a real estate agent that you trust doesn’t hurt either. Remember, you want to set the rent accurately even if this means you have to chip in a little extra to cover the mortgage and property taxes.
4. Lease Duration
The amount of time you intend to lease your home is entirely dependent on you. If you are relocating for a job opportunity, you may want an extended lease at least one year or longer. A short contract, in this case, would be a pain as the tenant is not obligated to renew upon expiry. Imagine having to start the screening process all over again? In another scenario – like taking time off for travel – you may want a short lease like one month to three months. Broach the subject with tenant applicants and find one who matches your preferred duration and other lease terms like automatic renewal.
Homeowners who are renting out their property for many months on end or even years may prefer automatic renewal to ease the paperwork. Nevertheless, this arrangement may not work well with tenants who don’t wish to commit too much of their time.
5. Property Management
Well after figuring out the state laws and finding a suitable tenant, the next responsibility is managing the property. Even if your home is in tip-top shape; plumbing and wiring inspected, and all minor repairs completed, you still have to maintain it. There will be periodic repairs here and there, collecting rent, finding new tenants, charging late fees, and of course, handling the occasional evictions or untimely vacancies. A quick search for Rental Property Manager Raineandhorne Zetland will present a range of reliable options of property managers to take up these responsibilities.
6. Spruce Up
Finding a renter entails doing everything possible to make your property appealing from the exterior front to the interior. Do you have loose shingles on the roof? When did you last mow the lawn and tend to the garden? How about the paintwork and a well-timed round of deep cleaning? These are some of the concerns that renters will raise during the open house tour. If you are renting a fully-furnished or semi-furnished home, you need to ensure the furniture is fully functional. Sprucing up the place can make a world of difference in the amount of rent you command notwithstanding all other factors.
7. Insurance Protection
The homeowner is responsible for protecting their property from natural and human-made disasters like rainstorms and arson correspondingly. If you had already taken out an insurance policy indicating this as your primary residence, you would need to sign up for a different one. Rental home insurance is what you need to cover the structure, repairs, loss of rental income, legal charges, and medical expenses if necessary. A point of clarification, the rental insurance does not include the belongings of renters so they will need to acquire renters insurance. Make sure they understand the difference and make plans accordingly.
Renting your home comes with a host of responsibilities that you must fulfill before the tenant moving in and afterward. Arm yourself with sufficient knowledge, so you know what to expect so as to avoid unwanted surprises. If things become too overwhelming – especially with extended leases – don’t hesitate to seek help such as enlisting a property management firm.