Becoming a landlord is a huge undertaking.
Not only are you opening up your property to strangers that may or may not be good tenants, but you’re also putting a lot of work on your plate. Being a good landlord can be a full-time job.
On the other hand, renting out a house can be the start of a very lucrative career as a real estate investor. It doesn’t matter if you’re renting out the basement of your own house or the entire house that you just bought; renting makes you money.
In this post, we’re going to discuss 5 major things that you need to know before you start renting your property out. You can’t be expected to know everything about being a landlord right away, but that’s why we’re here to help.
1. Understand Your Responsibilities
You aren’t just there to collect rent cheques and money transfers once a month. The landlord has a responsibility to maintain the house, arrange or perform repairs as they come up, and keep a subtle eye on your tenants to ensure your property is being respected.
2. Demand Sets Rental Rate
Renting out your property can become very lucrative, but in order to set a monthly fee that makes sense, you’ve got to look at the market. If the demand is low for rentals, then you’re going to have to lower your monthly rate; if it’s high, then you can raise it accordingly.
You want to be able to make money on your house without taking advantage of your tenants. In larger cities where the rental market has skyrocketed, there’s a real opportunity to make money, especially if you’ve owned the house for a long time.
You can find a lot of information online if you want to read more about what kind of profit you should expect from your rental.
3. Make Sure You Like Your Tenants
Finding good tenants is harder than you might expect. You can find people pretty much anywhere (local ads, online listings), but you can and should reserve the right to be picky. Have people fill out an application with employment information, past landlord references, and character references.
This allows you to do your own background check by pulling credit reports and checking their criminal history. You can weed out the bad applicants from the good ones and get the best tenant possible.
4. Protect Yourself With the Lease
Write up a lease according to the local fair housing, tenant, and insurance laws. Use it to provide an understanding of the lease terms (year, month-to-month, etc.), security deposit, late penalties, repair responsibilities, pet policies, and anything else you can think of.
With the lease, you just want to make sure that both parties understand what’s expected of them. It gives you a route for legal action, should any of the agreements be broken.
5. And Insurance
For good measure, you should also protect your home with the right renter’s insurance policy. If you were living in the house prior to renting it, you would’ve had a homeowners’ insurance policy, but that no longer applies.
This policy will protect you in the event of extensive damage to your property, most likely from a fire. Since you don’t have belongings in the property, encourage your tenants to get their own insurance.
Renting out a House Can Be a Great Job
When you’re renting out a house, it’s important to put your heart into it. Tenants always appreciate a landlord that cares about their property and if they know you care, they’ll make sure to take care of it as well. Follow these tips and you’ll be profiting from your rental in no time.
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