Giving your home up for rent is a great way to earn additional passive income. If you have a spare home or room, leasing it can get you consistent profits. However, things aren’t always what they seem. There will be times when your home is vacant for want of a tenant, or your current tenant might be defaulting on his rent payments.
Just having a spare home or room to rent does not ensure you’ll get a tenant, you will have to spruce it well to attract prospective tenants towards the property. If you are too busy or have multiple houses, you might need a real estate consulting firm to manage your real estate on your behalf.
Anyways, renting is not what it used to be. You will have to spend on it to zero on the right tenant. Here’s how to do it.
How to prep a home for rent
Plan goals and finances
Though your obvious goal is earning a consistent passive income, there may be other liabilities that you may want to pay off.
It could be your mortgage, property taxes, regular maintenance, and so on. Calculate how much you need every month to pay these off. Remember, earning rent is not a get-rich-quick scheme, after paying off your expenses, you may have only a few hundred dollars as profit from Real Estate Branding.
Set a reasonable rental rate
Gone are those days when landlords dictated terms to their tenants. With increasing competition, you have to set a rate that is in line with the market standards and the going rate in your neighborhood. Quote too less and you cannot cover your monthly expenses; quote too high, and prospective tenants may not come your way.
Who’s in charge of property management?
Do you have the time to be responsible for the upkeep of the property? If the kitchen sink suddenly leaks in the middle of the night, would you be on call for any such emergency? If you live nearby and have the time to respond, all well and good. If you do not, you will need to hire a real estate consultant who’ll handle such emergencies, collect rent and ensure the upkeep of the property.
Understand the landlord-tenant law
You will need to know your state’s landlord-tenant law to ensure you do not do anything that could put you in a soup. For instance, many states require landlords to give a notice 24 hours in advance when they have to visit the property. Landlords are prohibited to visit their properties unannounced. Moreover, there are many states which have enacted laws preventing landlords from discriminating against tenants based on their race, color, sex, nationality, or any other factor. You can only refuse to rent to people who have a criminal record, a bad credit score, or a poor rental history.
Set up policies and write a lease agreement
You can find a lease agreement template online and base the agreement on that. However, you can also modify it as per your requirements. You can refuse to rent to people with pets or add a pet deposit. Moreover, you can state in the agreement who will take care of specific responsibilities like mowing the lawn, garbage collection and disposal, and so on. Also, include what will happen when the tenant wants to break the lease or if he is back in his rent payments.
Show the agreement to a lawyer to make sure it covers everything. Ensure there are no loopholes the tenant can use.
Market your home well
Now comes the part where you have to make the house feel like home. Complete any pending repairs and renovations. For instance, fix the leaking bathroom faucet or give the living room a fresh coat of paint. The idea here is, you have to entice your tenant to rent the property.
To attract interest, get a professional photographer to click photos and list your property for rent on Facebook marketplace, rentals.com, or other similar portals.
Meet potential tenants
Usually, prospective tenants would want to see the house first. When doing so, engage in a conversation with them and check if they can become respectful and responsible tenants. Show a few of them your home and narrow down prospects.
To screen out unworthy tenants, ask for an application form and fee, get their social security numbers, ask for references and run a credit check. Check their employment status with the help of a few paystubs. Crucially, ask for references and personally call them to ask them some basic questions.
Document your rental and keep the security deposit safe
Keep all the rental documents as well as the security deposit safe. After all, it’s their money, you will have to return it when they move out. Take photos of each part of the property before the tenant moves in. This gives you legal proof of the home’s condition; if they damage something, you can show these photos as proof.
In a nutshell
Putting up your home for rent is not a simple job. Tenants consider many factors before they zero in on a property. Ensure you follow all rules and regulations before and during the lease period. Set up boundaries and ensure your tenant sticks to them.
Most importantly, renting your home should give you a consistent profit while also taking care of your recurring monthly expenses for the house. If you don’t have the time to look after it, consider hiring someone for the job.