Sometimes renting out your home is the best option if you’re stuck with a house during a slump in the housing market or if you just need to bring in some extra cash. Regardless of the reason for renting, the challenges will be the same across the board.
Fear not though, as this article will clue you in on what you need to keep in mind when renting your home.
Familiarize Yourself with Tax Requirements
Taxes are something you should consider the entirety of the year rather than just before. There are many tax write-offs you could earn as a landlord, no matter how reluctant you may have been about accepting that position. Familiarize yourself with all the ins and outs of taxes for renting out your home, or just take a look at this Airbnb 1099 tax guide. The tax part of this might seem intimidating, but it’s just a series of many small steps (steps that anyone can do!), and after you do it once, it’s a lot easier the next time.
Prepare Your Home for Potential Tenants
Because of the seemingly infinite renting choices out there, people tend to be much more selective than you might think. Imagine that your property is a reflection of what kind of person and renter you are. If there’s a layer of dust on every shelf, cobwebs in every corner or the house is just not well-maintained in more than one area, then people will assume that you will not fix things if they break or that the house might be in bad condition due to years of neglect.
Hiring a professional cleaning service will save you a lot of hassle, and you’ll only need to do it once before showing the house to possible tenants. An immaculate house will ensure that people get an honest picture of you and the property.
Get Your Property Insured
You’ll want to get rental home insurance, commonly known as fire insurance. It covers the home itself, medical expenses, legal expenses, and loss of rental income. Notify your tenants that you are not responsible for their belongings and that they’ll need to get renters’ insurance. Insurance will protect you and the tenants if both parties get a suitable policy that covers all the necessities.
Write Up a Lease
You’ll want to create a lease before you start showing the house so that you’re ready to get them signed to the property right away. If everything is not prepared beforehand and they have to wait, then that gives them time to change their mind. Write a lease that will protect both you and the tenant and includes all the important information about what is and is not permitted on the property. Your lease should include all the following:
- Lease term
- Security deposit
- Due dates and late penalties for rental fee
- List of tenants
- Maintenance requirements
- Behavior rules
- Pet policy
- Eviction terms
Being that every property is different, you might have some lines in there that other properties may not. Just make sure that your property is protected at all times.
Figure Out How Much to Charge
You’ll want to browse the properties in your area and see how much they’re charging. Your city, district, and neighborhood will all play into the cost of what your rental fee should be. A bustling area in the city will surely have higher property taxes and will require a higher rental fee. There are ways you can increase the value of your property by making simple renovations such as a fresh coat of paint, or new appliances, flooring, or lighting. The rent does not need to exceed or even meet your mortgage, but it must be competitive.
Market Your Property
After you’ve prepared your house to be viewed by potential tenants, you’ll want to take steps to market your property to the public. There are several websites that have proven to be great reference points for buyers and renters and have helped many landlords find tenants. Not taking advantage of those online resources would be like starting a business, but not putting a sign out front to attract customers.
Take photos of all the rooms and the outside perimeter of your property. Then write a description of the house, its area, and what makes it a convenient, comfortable home. Then make a profile on a few different property websites and provide all the necessary information renters would need to know.
Select a Good Tenant
Draw up an application that all prospective tenants will fill out. This should include their full name, employer, salary, social security number, and list of references and previous landlords. You’ll need to perform a criminal background and credit check, along with calling up all their references to ensure that they’re a trustworthy tenant.
Build Rapport with Your Tenants
A friendly, but the professional relationship is a very important thing to have with your tenants. You can build rapport with your tenants by calling ahead if you need to come to the property, making sure there is a tenant home when you visit and treating the house as their home. This shows that you respect them and their privacy and will go a long way with building a positive relationship. By making this extra effort to be respectful, the tenants will be more likely to maintain the property well, pay rent on time, and to be responsive to your inquiries.
Be Prepared for Evictions
If worse comes to worst, you’ll need an attorney to evict a tenant. If a person is unwilling to leave when you order them to, then your only course of action is to get the sheriff involved. You’ll need to have money set aside for possible evictions, as they could easily add up to one month’s rent.
These are the foundational requirements for renting out your property. If you stick to the basic rules of thumb and fully equip yourself legally and financially, then you should have no issues with tenants. Remember to always hope for the best, but prepare for the worst possible case scenario, as people can be fickle unpredictable beings.