Make a Pass at Passive Income: 10 Tips for Renting Out a House
Struggling to make your mortgage every month? Or maybe you just need a break. Perhaps you find it overwhelming to keep the household running. Perhaps you inherited a home. You can make a nice bit of extra income from renting out a house. If you choose to rent it out rather than living in it for whatever reason, there are a few ways to make it run smoothly. With some planning and care, you can rent your house and keep it rented with minimal headaches and problems. Here are a few tips to get you started.
Renting Out a House
It’s important to take the dollar sign out of the equation when getting ready to rent. Yes, you want a good price, but you need to be smart and be prepared.
1. Repair and Safety
It’s very important to have all the necessary repairs done before you show the house. Leaking taps, broken windows or torn screens, broken floor tiles and loose stairs or handrails. It not only looks better but it’s a safety issue, as well. This includes the outside, too. Repair steps, doors, cracks in the sidewalk and any eavestroughs, siding repairs and paint if needed. Make sure you have working smoke detectors and fire extinguishers in place. Check and repair any electrical outlets or faulty wiring throughout and put in new light bulbs.
2. Clean The House
Top to bottom, get the place cleaned. Hiring a professional team to clean the house makes it easier to maintain. make sure you do windows, walls, floors, everything. There can be stains and odors you are used to seeing that can turn a potential renter off. Paint the walls white or off-white. It makes it easier for people to imagine their own furniture in the room. It also looks cleaner, brighter and bigger. Shampoo the carpets or take them out of they are stained or damaged. Water damage can cause a lot of molds to grow underneath. This can cause damage to the flooring and the underlying carpet.
3. Have Proper Insurance
You will have insurance in place, but you need to have insurance to protect you and the house with tenants. It needs to cover all possibilities, including damage to the house, fire, and any potential lawsuits. You should also encourage your tenants to get their own insurance, as yours will not and should not cover them. They need to take responsibility for their own property and yours.
4. Hire a Management Company
This can take a lot of the stress out of the process. They can find your potential renters, handle all the ads, signage and prepare the leases. They will set appointments show house and finalize the deal. They also have contacts with people wishing to relocate to your city. They can prepare the house, professionally dress it and even take over the whole process of collecting the rent. They will have real estate lawyers, professionals who know what is needed and what forms, insurance and other licenses or applications you need. To help you, learn more here.
5. Tell Your Insurance and Mortgage Companies
Your bank, insurance company or financial institution need to know about the changes. Even though you will still be paying the mortgage, you should set up an account specifically for the deposits of rent. There will be additional insurance needed, and the bank needs to know about the changes. A new account to deposit the rent and security deposit will help keeps everything in order.
6. Make a Lease
This is where you can get your specific rules in place. Whether you allow smokers, pets, when the rent is due and how long they are committing to the house. You can set limits and restrictions that are needed for your own protection. This is where you set the rent, security deposit and get them to sign to acknowledge they agree to your terms. This can include noise, parking, house maintenance and the number of people living in the house.
7. Understand Your Responsibility
Talk to a professional about your responsibilities, your rights and what is expected of you as a landlord. Ask a real estate lawyer for help in drawing up the lease and general knowledge.
8. Set a Competitive Rate
You want to get a good price on the rent, but setting it too high can drive away great tenants. Setting it too low can be disastrous, as well. Check the market for what similar homes are getting. You can check any real estate listing for information about prices and see what you can expect to ask. Make some calls, check the listings and price your house accordingly.
9. Be Picky About Tenants
Don’t panic and just allow the first people in that show an interest. You want to get the right people in. Allow everyone to apply, even if you know you don’t want them. They can’t claim you discriminated against them because they have kids, even though you don’t want kids in the house. If you are searching for tenants yourself, get the word out to family and friends. Place an ad online, in a local paper or post a sign at your workplace.
10. Verify References
Run credit checks, call their references and do as much of a background check as possible. This will help weed out anyone that will be a problem down the line. Make sure they are who they say they are and are employed where they claim. This is the best way to screen out potential problems before they settle into your house.
Renting out a house to ease the mortgage or just a little extra income shouldn’t be a hassle. Do your homework, consult experts and you shouldn’t have any problems. It can be the perfect solution if you can’t sell the house but still have to pay for it. Follow the rules set in place in your area, make sure you cover yourself legally for all potential issues that may arise. For information about luxury properties or any other information, please contact us today.