If you’re someone who’s thinking about renting your own home to strangers, you’ve got some things to consider. Maybe you’re giving some thought to the benefits of a little more cash coming in. Perhaps you’ve daydreamed about using that extra income to pay down debts, or maybe you just want to save it. Regardless of your reasons, you have to be careful since renting out a house can sometimes be more trouble than it’s worth.
That’s why Mares Mortgage has put together this survival guide with thirteen tips you’ll want to pay close attention to.
If you’re ready, let’s get started!
Treat Your Home Like a Business
It’s really crucial to think about your rental property as a business. Maybe it’s not your primary source of income, but that doesn’t change the fact that you must treat it as if it were. It’s critical to take an in-depth look at potential tenants before they move in. Afterward, your behavior toward them must be entirely professional.
Moreover, your finances need to be in order, and you must keep yourself in compliance with all local, state, and federal laws. Recall that doing so keeps your reputation intact and helps you to prevent legal issues before they arise.
Related: How to Rent Out Your House and Buy Another
Decide How Much to Charge for Rent
At Mares Mortgage, the Loan Brothers believe that it’s vital to research your market. You’ve got to discover what a fair market rental price is in your area. Remember that ensuring that how much you charge for rent is within the range that makes sense for your area can make all the difference between drawing in the right tenants and having to deal with a long-term vacancy.
Additionally, you can use an online application or learn more from one of our Orange County mortgage brokers about what kind of rates are appropriate in your situation. Remember that you want to be fair on price so that tenants can pay and pay on time.
Advertise Your Rental Online
In our digital age, you’ve got to recall that most potential tenants are going to be searching for a rental home online. That means to rent out your home; you need to create a rental listing on the World Wide Web.
When you do that, be sure to make a listing, which provides tenants with all the information they’ll want to know about your home. For instance, make sure to list the address, how many bedrooms, amenities, bathrooms, and any attractions that may be nearby. More information is better than less. Clear photos are also a must-have. If you’ve got steady video with clear audio descriptions, even better. Make sure these cover the house’s common spaces and every other room.
Screen Tenants Thoroughly
When it comes to renting your own home, it’s a given that you’ll want to find tenants who will take care of your property and pay rent on time. To do that, you’ll need to screen them in-depth and properly. It’s possible that you’ll receive a ton of applications from the listing you put online, so you’ll need to think about the criteria you want a potential tenant to meet.
At a minimum, you’ll want to ensure that potential tenants have a good rental background, have the ability to pay, and don’t have a criminal history.
Hire a Property Manager
You might want to give thought to hiring a property manager. It may be a worthy investment, particularly if you want to save time and the aggravation owning a rental property can sometimes involve.
For example, the property manager can deal with such things as collecting rent, marketing the property when there are no tenants, and dealing with any tenant issues when they arise.
Moreover, multiple rental properties can be managed by a good property manager. If you have more than one home that you rent out, hiring a property manager could be a wise decision. Just be sure that you screen property manager candidates as thoroughly as you would a tenant.
Related: Questions to Ask a Mortgage Lender
We provide great, practical information on renting out your property as well as easy options to refinance your home. If you’re considering renting out your own home, learn how Mares Mortgage can help!
Create a Written Rental Agreement
The right way to make sure that you are protected and that you clearly communicate your expectations is to have a written rental agreement. Remember that written agreements are usually better than any oral agreements. Even if an oral agreement is considered legally binding in some instances, it can be hard to prove exactly what was agreed upon without a written document. The bottom line is that you should insist on a written rental agreement before a tenant is allowed to move in.
Remember that whatever agreement you present your tenant with must adhere to the laws of your state. You should also have the agreement reviewed by a competent attorney before getting the tenant’s signature.
Check Background and Credit History
This can seem harsh, but recall that a bad credit history could mean that someone isn’t financially responsible. You aren’t renting your own home out for charity, so it’s considered a best practice to ensure that anyone you’re seriously considering renting to has good credit.
To do that, you’ll want to conduct a credit check. When you take a look at a tenant’s background and credit report, pay attention to whether that individual has the following: undue payments, bankruptcy filings, notable debt, and any previous evictions. Those are red flags.
In contrast, a background and financial history that is free of those things indicate that a tenant will likely pay on time, will treat your property with respect, and has no prior criminal history.
Have a Mandatory Rental Application
Before you ever do a credit check, you’ll want to have a tenant fill out a mandatory rental application. This will ensure that you get quick information on the person applying to rent your home.
You’ll be provided with data such as the tenant’s name, current address, their employer’s name, landlord references, income, and the reason for their move. This is vital information that can help you decide if you even want to move forward with a credit check, etc.
Allow Tenants to Pay Online
As noted above, this is the digital age. You’ll want to make sure that you’re up-to-date in the way you allow tenants to pay rent. That means ensuring that tenants can pay rent online. Just some of the reasons why include the fact that paying online is both convenient and secure. Remember that it’s more likely that tenants will pay rent on time when you make it easy for them to do so.
Consider the benefits to you and the tenant when that person can simply head to their computer or even their smart-phone and make a payment and you get paid on time each and every month.
Develop Rules and Stick to Them
Your written agreement could lose its importance if you don’t enforce the rules it contains. It’s possible that tenants could take advantage of you if rules aren’t enforced. There could be many rules, but the one you must insist upon keeping is a late rent fee. If you want to provide the tenant with a grace period there is nothing wrong with that. However, be sure that after the grace period expires the tenant pays the late fee.
Moreover, you should lead by example. Tenants are more likely to adhere to the agreement if you do as well. For instance, you should always follow the Notice of Entry rule. This typically requires that a landlord give the tenant 24-hours notice before entering the rental home. Remember, if you respect the rule you set in the first place, it’s much more likely that your tenant will too, and they’ll respect you more.
Encourage Tenants to Get Renters Insurance
It’s crucial to remember that the laws regarding the need to acquire renter’s insurance are different from state to state. Because of that, you’ll want to speak with a legal professional about whether you should add a clause to your agreement concerning mandatory renter’s insurance or not.
Whether required or not, it’s a good idea for tenants to get renter’s insurance, and you should encourage them to do so. You want to help prevent lawsuits that could arise if a renter’s things become damaged. Moreover, renter’s insurance is usually low cost, and many tenants will willingly take on that small, additional burden.
Treat Good Tenants Like Gold
Remember that finding good tenants isn’t always an easy task. You have to screen people thoroughly before signing a rental agreement, and having to do that repeatedly isn’t much fun. It’s a lot of effort on your part, so keeping good tenants is incredibly important.
To do that, you should treat tenants who consistently pay rent on time and who care for your property like they’re made of gold. In a sense, they are. Additionally, make sure you ask those tenants to renew their agreement with you 90 days or so before it expires. Renewal on the agreement in advance can help prevent you from having to search for new tenants in order to fill a vacancy.
Related: First Home Buying Guide: Tips and Tricks
If you’re brand new and need to know the ins-and-outs of renting out your home, the Loan Brothers at Mares Mortgage have a deep understanding of things like market movements and the going rates for properties in your area. We encourage you to learn more!
Keep Records of Everything
It would be best if you were keeping records of rent receipts, maintenance receipts, deposit receipts, and all communications between you and the tenant. In other words, keep records of everything. Additionally, consider keeping digital records as these can be kept without the need for paper.
The underlying reason for keeping all these records is to ensure you’re covered in case legal problems ever arise. Keeping records is a way of protecting yourself in court since if you have these documents, you are more likely to prove you’re in the right. Consider these records as evidence in case you ever need to go to court.
Key Takeaways for Renting Your Own Home
Remember that every step, from the moment you come to the decision that renting your own home is a good idea, to the moment the tenant signs the rental agreement, matters. No one wants to sacrifice tons of money or time when they don’t have to. Hopefully, you’ve found the thirteen survival tips for renting your own home contained in this article informative. If you have questions on anything here, a qualified Orange County mortgage broker will be happy to answer them.
Moreover, if you’d like to find out about various refinancing and loan options, Contact Mares Mortgage, and the Loan Brothers will provide you with all relevant information.