Perhaps you’ve inherited property, or maybe you’ve bought a new home and aren’t ready to sell your first home yet. No matter the reason, renting out your first house can be a great way to earn income. However, it definitely takes work.
With some knowledge and understanding of how the rental process works, this can be done successfully. Here’s a step-by-step guide for how to rent out your first home like a pro and ensure it’s a smooth and financially successful venture.
Create a financial plan and set a rental rate
Renting out your first property will not be a quick and easy way to make money. It’s a long-term process that requires expenses which should be factored into your budget. These include a mortgage payment (if you have one), property taxes, insurance, routine maintenance, repairs, and upgrades over time.
Once you’ve devised a financial plan, you’ll need to set a rental rate. You of course want your rental rate to be higher than whatever your expenses are, but you want to try to keep your rate competitive at the same time to appeal to prospective tenants. Start by doing some research on nearby rentals, and then touring those rental properties to compare quality, upgrades, and amenities.
Designate a property management plan
Create a plan for who will manage your property on an everyday basis, from taking maintenance calls to looking in on your rental every so often. You can pay a property management company to do it for you (which is a more convenient option) or you can maximize your budget and do it yourself.
Educate yourself on landlord tenant laws
Every state has their own landlord-tenant laws regarding security deposits, property entry, and timeframes for ending a lease. Make sure you’re also clear on federal laws covering housing safety and anti-discrimination laws. If you’re unclear on these laws, see the Department of House and Urban Development’s website for both federal and local laws.
Decide on rental policies and write a lease
Before drafting a lease, you’ll need to make some decisions about your rental policy. Will you allow pets, and if so, will you require a pet deposit? Who covers outdoor maintenance costs?
These are just some of the questions you’ll need to work out before writing a lease. Researching sample leases online is a good way to see how others have worked out similar matters. Before finalizing a lease, consider contacting a lawyer to make sure you’ve followed all legal guidelines.
Formulate a marketing plan
To help lure more prospective tenants, make sure your rental looks its best by hiring a professional photographer to take high quality listing photos. You may want to consider staging your rental home beforehand. Also, be sure to advertise your listing online across top listing rental websites and on social media.
Screen prospective tenants
Once you narrow down a few prospective tenants, it’s a good idea to have each one fill out an application, and then run a background and credit check on them.
To simplify the screening process, consider using a property management software program where you can conduct free tenant screening, market your home rental, obtain forms, and safely keep lease information in one place.
Collecting the security deposit and documenting the condition of your rental home are two small but important steps.
You will legally owe your tenant their security deposit at the end of the lease, so keep it in a separate account. If you spend some of it on repairs, you’ll have around 30 days to do it and provide a document showing how the security deposit was spent.
And before your tenant moves in, take photos of the condition of your rental property. This is so you can prove that any damage done to your rental home did not exist before the tenant moved in.
To read more on topics like this, check out the lifestyle category.