The housing market has taken a nosedive. Selling your house seems impossible, due to the unexpected crash.
So you are left with the option of renting your house, which is a good choice and one of the best ways to cut down your mortgage.
While renting out your home might appear like an easy task, you should note that a little mistake here or failing to consider some factors before renting your home could leave you with loads of regrets.
To guarantee your peace of mind and the safety of your property after renting your home, I’ll advise that you consider these 6 important tips first.
1. Find a good tenant
If you aren’t leveraging the services of a realtor, the job of sourcing for tenants will rest on your shoulders. Sourcing for tenants isn’t a big deal, provided you know how to market your property.
You can source for tenants by placing ads in local newspapers, both print and online. Furthermore, you can get the help of friends, relatives, and coworkers in spreading the news.
After finding interested tenants, request that they fill out an application form, stating their basic information, such as their name, employer, salary, former landlords, including references. You’ll also need additional info like their Social Security number and signed authorization to examine credit reports and criminal background.
If performing all these tasks seems burdensome and you have some money to spare, don’t hesitate to contact an online agency to provide background checks. However, before you hire an agency, ensure it is accredited by the Better Business Bureau.
You can conduct your background checks by:
- Gathering credit reports: You can carry out your research via one of the credit reporting agencies, be it Equifax, Experian, or TransUnion, provided you are conversant with the rules of the Fair Credit Reporting Act or FCRA.
- Inspecting criminal history: Rummage through state and local records online or find an agency that conducts tenant screening.
- Checking references: reaching out to employers and speaking to former landlords
2. Figure out how much rent to charge
Whoever will rent your house wouldn’t do so for free, so before you consider putting those ads out, it makes sense to sit down and figure out how much rent to charge.
You can get an idea of rent charges by checking sources like newspapers, online resources or probably neighborhood rental signs. When fixing your rent charge, don’t go overboard. Ensure you are realistic about rent levels to find tenants fast. Even if the rent is lower than your mortgage payment, you must stick by it to encourage potential tenants to check out your home and rent it afterwards.
3. Prepare your home for renters.
Would you rent a home with a faulty heating system, cracks on the walls, a disgusting toilet, and a terrible lawn? I doubt that. If you can’t spend your hard-earned money on such a home, then the chances are that your potential tenants wouldn’t want to as well.
Therefore, before renting your home, it is important that you put it in order to encourage potential tenants to consider your home. You can hire a property management company to ensure that your property is in optimum condition and raise your chances of finding good tenants.
4. Protect your rights with a lease
A lease is simply a contract containing promises between you and your tenant. To avoid misunderstanding of any sort, it is important that you have a written lease that contains each term of the tenancy. Without this important document, it will be quite hard to enforce its provisions should your tenant violate the terms.
A good lease adheres to fair housing, rental, tenant and insurance laws of your region. Worthy of note that these laws are different in all states, counties, and cities. Ensure you contact a professional for advice.
A lease should contain the following:
- Lease term: A monthly lease allows you to sell the property easily when you decide to. An annual lease, on the other hand, offers more stability if you are retaining the property.
- Security deposit: Usually one month rent or more
- Rental due date and penalties for paying late
- Repairs including who is liable for what
- Routine maintenance and its responsibilities, like lawn care
- List of tenants
- Rules and regulations regarding how tenants should act
- Pet rules
- Who pays homeowner association fees
- Eviction terms like destroying property, being rude, failing to pay the rent.
5. Leverage insurance to protect your property
The reason you insure your car is the same reason you should insure your house. In a world where unforeseen circumstances happen daily, insuring your property is the best way to protect your finances in the event of a catastrophe.
Due to the important role homeowner’s insurance plays in protecting your home, it makes sense to consider having one before renting your apartment. If you insured your house under a homeowner’s policy, ensure you update it to rental home insurance once you become a landlord.
Unlike a typical homeowner’s policy, rental home insurance covers your home’s structure, legal and medical costs, including loss of rental income, if repairs are required. Also, since you aren’t liable for the tenant’s belongings, you should encourage them to consider renters insurance.
6. Prepare well for evictions.
So a tenant willingly destroys a few appliances in your home for the second time and refuses to pay. Fed up, you decide to evict the tenants based on the content of the lease created. But, the unapologetic tenant is stubborn and refuses to go; neither does he own up for what he does.
What do you do in this case? You certainly cannot go into their room, move their property and kick them out. You may end up regretting such action.
So what’s the way out?
In this case, you’ll need the help of an attorney who’ll help you take the matter to court. Should everything go as planned, the uncooperative tenant should be kicked out of your home and forced to pay damages. Mind you, going to court should be your last resort due to the costs of the process.
If you wouldn’t be leveraging the services of a realtor when renting your house, expect a few challenges. But you shouldn’t fret, as these challenges can be overcome with the right approach. Your top-most priority when renting your home is renting it to the right individual. Though renting your home to the wrong person will guarantee a rent fee, it might leave you with loads of regrets.