How to Rent Out Your House
Are you considering renting out your house to generate some income? Maybe you have some bills to pay and could really use the additional influx of money? There are lots of reasons why someone may consider renting a home.
Renting your house to tenants is an excellent way to invest your money. But it doesn't come without its problems, and if you are a new landlord, these can be particularly tough to deal with. There are some things you can do to reduce potential problems. Let's take a look at some of the best tips for renting a house. Part of being successful will be understanding the local real estate market, along with having a firm grasp of rental laws and procedures.
Being Professional is Key
Even if renting out your home isn't your primary occupation, you should approach it in a professional way. Treat it like a business rather than just a side hustle, and you can stay on top of many issues that could become problems. Do your research and speak to others you may know who have been or are landlords.
Getting Tenants
The easiest way to find new tenants for your property is to go online. This is where most renters will look first to find a home, so it is your best chance of renting your house quickly.
Create a listing that provides lots of clear photos and tells the potential tenant everything they would want to know. Give a full description of the property, and highlight the features to make your home stand out from similar listings. If you choose to do this yourself rather than hire a professional, there are some sites worth checking out, including:
- Apartments.com
- ForRent.com
- Craigslist
- Zillow
Hire a Real Estate Agent
While it is certainly possible to rent your property, especially in high demand areas, you may find that hiring a real estate agent is your best bet. Real Estate agents have access to the multiple listing service along with other websites that consumers cannot access to advertise.
Real Estate agents are paid differently for renting a house when compared to selling a home. There can be a few scenarios when it comes to compensation. Usually, the fee for renting a home is either a full or half months rent depending on local customs. If the rental fee is a full month, it is typically split between the listing agent and the agent who brings the tenant.
It is also possible that the tenant pays their agent, and the landlord pays theirs. Again, it is usually a half months rent. Discuss how the marketing fees will be charged upfront with the agents you're speaking to.
The Price is Right
When setting the price for your rental, you have to factor in your expenses. This will include mortgage payments, HOA fees, taxes, and insurance. On top of the fixed costs, there are going to be variable expenses, like repairs, which are more challenging to estimate.
Research the local rental market to find out what a property like yours will rent for. Use this information, along with your expenses, to set a rental price that will attract tenants and not price yourself out of the market.
If you have been on the fence about renting or selling, you might want to consider a rent to own scenario. I could work out as the best of both worlds if you get the right tenant. Take a look at the resource at Maximum Real Estate Exposure on everything you should know about renting to own. Lots of folks look for properties they can rent to own. The trick is knowing how to find them as rent to own homes are usually hard to come by.
There are potential downsides of leasing to own for both tenants and landlords. It is essential to have a firm grasp before entering into this kind of legal agreement.
Screening Tenants is Paramount
To reduce the problems you could experience, you need to reduce the chance of getting a problem tenant. If you have a screening process, you stand a greater chance of renting to someone reliable. You want to find someone who will pay their rent on time and not cause you any problems.
If you are working with a real estate company, they will generally handle the entire screening process, including collecting applications, review them with you, as well as doing a credit and background check.
The credit check will more than likely go through one of the three major credit bureaus.
Background Checks are Essential
To make sure your tenant will pay their rent on time, you can run credit and background checks. You are ideally looking for someone with good credit, without significant debts, bankruptcy, or a history of evictions.
The best indication of future behavior is what they've done in the past. So if they have failed to pay their debts previously, don't be surprised if you have difficulty collecting rent from them.
Using a Property Manager Might Be Smart
If you don't live close to the home or lack the time to deal with the property yourself, a property manager can do the job for you. They could take care of most of your responsibilities, giving you less to worry about.
Use Application Forms
If you are not using a real estate agent, you should have a rental application form ready for tenants to fill out. This should ask basic information like name, present address, employer, income, and give information about their references. This will help you assess if they are the right person to rent to.
Renters Insurance is Vital
If you require renters insurance, you will protect yourself from possible litigation and your tenant from financial loss, should something go wrong. Most tenants will be willing to agree to this, as the cost isn't considerable, and it offers them protection.
However, you should only have this as a clause in your contract if you know it is legal in your state. The rules vary in different states.
Rental Agreements are a Must
So that everyone knows where they stand and their responsibilities, a written rental agreement is a must. It should protect you in case of legal issues and will set out what should happen in common rental situations. You can include late fees, whether pets are allowed, and any other rules in the agreement.
When the agreement has been signed, you will have to make sure the tenant sticks to the rules. Failure to do so could lead to the tenant taking advantage and doing more things against the rules. You have to follow your part of the agreement as well if you hope to enforce the tenant's obligations.
You will also want to figure out in advance whether you want a longer-term lease or a tenancy at will agreement.
Collecting Rent and Evictions
Rent collection is easy and convenient if you set up online payments. It allows you to see immediately when you have been paid, and the tenant can create scheduled payments. It keeps a record of the transaction and avoids any possibility of the check getting lost in the mail.
If the tenant stops paying rent or violates the rental agreement in some form, it will be crucial to understand the eviction laws and process in your state. If you are a first-time landlord, do this research before renting.
Collect a Security Deposit
One of the more vital parts of renting a house is collecting an appropriate amount of money as a security deposit. Unfortunately, more often than not, your home will have some wear and tear due to tenants occupying it. You will want to make sure that if you get a lemon for a tenant and they cause damage, there are funds allocated toward any necessary repairs.
Keeping Sound Records
Record keeping can also be done online for more convenience. You can store receipts, communications, and copies of agreements online so that they can be referred to if needed in the future. Professionally organizing your business will pay off in the long run.
Evaluate Before and After Occupancy
Whenever renting a house, it will be essential to have the tenant fill out an evaluation of condition form before they take possession, and after they leave. You will want to document to the letter what the condition of your property is at the time of occupancy.
Doing so will be protection for you in the event the tenant does damage to your property.
Final Thoughts on Renting Your House
If you want to hold onto good tenants and reduce vacant periods, following these tips for renting a house should really help. If you take your business seriously and do your research into potential renters, you'll find you run into fewer problems, whether you are new to being a landlord or not.
Hopefully, you have enjoyed these tips for renting a house.
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