Renting out your home can be a great financial decision in the booming rental and real estate market. Many new landlords are unsure of listing their property, hiring a property manager, and finding tenants. But if you can overcome those hurdles, you can enjoy the many benefits that come from being a landlord. Becoming a landlord creates opportunities for passive income, but it doesn’t come without a learning curve.
Here are 10 tips for renting out your home as a landlord:
Keep Your Home in Good Condition
When you’re a landlord, your home is your business. Updating it and keeping it in good condition makes it more desirable for tenants, which can lead to higher rent prices and prevents any potential issues down the road.
At a minimum, ensure your home is safe. This includes testing smoke alarms and carbon monoxide detectors, clearing vents from buildup, ensuring the appliances and pipes are in working order, checking the roof and windows and leaks, and checking the electrical systems. You may also want to perform a professional inspection of the home to alert you of any potential issues that could become bigger problems for tenants.
Before you rent your home, make a plan for seasonal repairs and maintenance. No matter how well you repair things beforehand, issues are sure to arise. Hire a handyman to keep on call for quickly handling repairs around the home.
There are a few things you can do to make your home look more appealing, like painting the walls and installing new floors. Small upgrades to light fixtures or window treatments can make your home more enticing to potential tenants.
Post a Clear Listing
Your listing can make or break the success of your rental. Start by taking pictures that clearly show the features of your home, including photos of every room. Your listing should include the main features of the home, including its size, location, and other amenities.
A clear listing also should include the rent price and what utilities the tenant is responsible for paying, as well as any rules or limitations you want to place. This is the place to share if pets are allowed, how many people can live in the home, the length of the lease, and anything else that would be important for tenants. A clear listing not only attracts great tenants but also weeds out tenants who don’t meet the qualifications.
Don’t Underestimate the Time it Will Take
Many landlords think they can sit back and watch the passive income roll in. While renting your home isn’t a full-time job, it does require quite a bit of work. This is especially true when you first rent your home and have to prepare the home for listing, create the listing, screen tenants, and sign the lease.
Other issues may arise with tenants that need to be addressed, and you’ll have to find new tenants likely every 12 months. A great landlord is responsive, so plan to be available to your tenants around the clock.
Screen Potential Tenants
Taking the time to screen potential tenants before they sign a lease can create a smoother rental process later.
As a landlord, you want to find tenants who will pay their rent on time and take good care of your home. That’s not the case for every tenant, which means it’s crucial to sort through the applications to find the best fit.
It’s often better to take your time and leave the home unoccupied for a few more days than to rush into the first person who applies to rent your home.
In the rental application, ask for personal and professional references to see if the person is responsible. Run a credit check to see the credit reports and if the person is capable of paying rent on time.
Don’t be fooled by someone who seems friendly but who has a history of not paying their rent on time. Keep in mind that when screening potential tenants, you can’t discriminate against someone based on their race, gender, sexual orientation, or a number of other factors.
Hire a Property Management Company
Renting your home as a landlord takes a lot of time and effort. Hiring a property management company removes much of the day-to-day responsibility and allows you to sit back and relax.
A property management company like All Property Services can remove much of the stress for new landlords. A
s a bonus, you also have access to all of the property management company’s resources for listing the property, screening and onboarding tenants, collecting rent, dealing with any issues that arise, maintaining the property, and more.
A property management company helps you deliver professional-level service that attracts and retains tenants without having to invest in the systems yourself.
Hiring a property management company also expands your opportunities to have multiple rental homes or rent homes that aren’t close to where you live.
Protect Yourself Legally
Being a landlord means running a business. Taking steps to protect yourself and your property starts by using a robust residential lease agreement. Tenants and the landlord must both sign this agreement before the tenant can move in.
The lease agreement establishes the relationship and sets the terms and rules for the rental agreement, including the rental price, when rent is due, the responsibilities of the tenant, and the responsibilities of the landlord.
In most cases, tenants are responsible for following the terms of the lease, taking care of the property, and following the lease and rental rules.
Landlords are responsible for following the terms of the lease, keeping the property safe and up to code, and maintaining the plumbing, electrical, and heating systems. The lease should state the consequences of not following the rules, including the late fee for not paying rent on time and what would cause a tenant to lose their security deposit.
Be aware of local, state, and federal housing laws before you rent your home. Different cities and states may have different requirements about rental inspections and licenses, as well as limitations of who can rent a property. Be sure to check with the local housing department to ensure your property follows all regulations.
Another way to protect yourself legally is to require renters insurance, which protects you if any of the renter’s belonging are damaged. In most cases, renters’ insurance is fairly inexpensive for tenants.
Landlords requiring renters insurance is becoming more commonplace, meaning most tenants likely won’t think twice about it.
As a landlord, you’ll likely want landlord insurance, which covers your home when someone else is living in it. Contact your insurance agent for more details and the right policy for your situation.
Much of what you’ll do as a landlord comes with records, including deposit and rent receipts, maintenance requests, and communication. Keep digital records of everything to protect yourself later on.
Be sure to take photos of the rental property before each tenant moves in, as well as photos after they move out. These records can be beneficial for your own tracking and can help solve problems if the property is damaged.
Keeping records also makes it easier when tax time comes around and can help grow your business if you ever want to add a rental property and want to look back and what you’ve charged, issues that arose, and how you communicated with tenants.
Establish Payment and Communication Channels
Most tenants want the convenience of being able to pay rent and communicate with their landlord online.
Establishing digital payment and communication channels is a win for both tenants and landlords. It streamlines communication and makes it easier for tenants to take care of business and pay their rent on time.
It also allows landlords to stay organized and have all their communication in a single place for faster resolution.
There are a number of online rent payment platforms available for landlords. And communication can be handled through an online communication portal or by using a messaging app that saves old conversations.
Hold On to Good Tenants
One of the greatest unknowns of being a landlord is if you’ll have good tenants. Tenants who pay their rent on time and take good care of the property can make being a landlord fairly easy, but every landlord also has the horror stories of tenants who trash their homes and are constantly late with their rent.
When you find a good tenant, hold on to them. It not only removes the stress of potentially having a bad tenant but also eliminates the cost and time to find a new tenant.
If you want to keep a good tenant around, consider offering an incentive like a rent discount for one month or updating an area of the home when they renew their lease. Being a landlord can be volatile, so hold on to any chance you get for consistency.
Renting out your home as a landlord can be a great financial decision. Before you take the plunge, be sure to follow these 10 tips for new landlords.