Maybe you have been trying to sell your home for a really long time and you have come to the conclusion that you just cannot move it at that value that allows you to break even. Maybe you have inherited a home that you don’t want to sell or maybe you just want the extra income that comes with being a landlord.
Regardless of what the reason may be, first you will need to get your property in order both physically and financially. There is a list of things below you will need to do before you start bringing tenants into the property.
1. Proper Insurance: Even though you have homeowners insurance on your house, that isn’t enough if your property is going to be used as a rental. We worked with thousands of homeowners and it is important for you to know that any time you have somebody in your house that you own, you take on the responsibility of their safety. What if a telephone pole falls on the house injuring one of your tenants? What if there is an electrical fire causing the house to not be livable for a while. A homeowners insurance policy for renters from bear river insurance will often include reimbursement for lost rental income. Also make sure your tenants get renters insurance which will cover against theft or damaged items. Your tenants can get this for as little as $10 a month.
2. Upgrades & Repairs: Just like when you go to sell your home, doing repairs and making upgrades to the property increases rental value as well. It makes it more appealing to a potential renter and is willing to pay a higher price for a nicer looking home. The more people interested in the property will result in a better tenant because you can be more selective. Make sure to hire a handyman services company to do the upgrades and/or repairs.
3. What Will The Rent Be? The first place you should start when deciding what to charge for rent is to write out all of your monthly expenses.
– Mortgage payment
– Management company fee (optional, usually 10% of rent)
Once you have determined your monthly expenses then you will have a better idea of what you should charge for rent. Once you come up with a number check the local rental homes in the area and see if you are in the same ballpark as the rest. If your rent is way higher then the average rate in the area you may need to crunch the numbers again.
4. Finding a Tenant: Before you start pre-screening potential tenants make sure you understand the Fair Housing Laws which prohibit discrimination based on sex and race. It is also a good idea to run a credit check on each applicant. Most of these people have shaky credit which is why they have to rent in the first place. You are mainly checking to see if they have any judgements against them for not paying there rent or past foreclosures and/or repossessions. Make sure they have a stable job that brings in enough money every month to pay the rent.
5. Property Management Company: If you don’t want to headaches of being a landlord I highly recommend hiring a property management company. A property management company will handle things like tenant complaints, repairs, evictions, tenant placement, collecting rents, etc. Even though the fee for this service is 10% of the rent each month it will be completely worth it not having to meet and deal with any of these headaches. Especially if you are dealing with multiple properties this service will be worth its weight in gold!