Many homeowners prefer renting their spare space to make extra income. The reason for renting out a place varies; some would like to save up for plans, a trip, or even for buying a new house. The most common reason why people prefer renting their space is to be able to pay down their debt. And then there are others who are first-time real estate investors looking to rent out their investment properties.
The real estate market is unpredictable; selling a home is getting tight. On the other hand, people are traveling and shifting cities in search of better jobs. In this situation, the only other viable option is renting out your property. Irrespective of the reason for renting as a property owner, you need to study the locality, and then decide on all critical factors involved in renting a space.
Some places and localities are trendy among students and tourists. If your home or investment property happens to be located in such an area, then look into short term rents. For example, if you live in or have purchased a rental property in the Atlanta real estate market, the short term rental strategy would make for a profitable venture. Various apps help homeowners to rent their extra space to tourists for a short duration like Airbnb or VRBO. However, before you sign up for such services, make sure to read their rules, regulations, and rental agreement (if any) carefully.
Either way, as a property owner and landlord, your responsibility towards your space is higher than that of a tenant. Hence, check out these interesting five essential tips before you start your journey as a landlord.
1. Understand the Role of a Landlord
The essential step in renting your space is deciding whether you are ready to take up the responsibility. As a landlord, you will be entrusted with specific obligations that you will need to learn and handle. No doubt renting a space is beneficial in terms of money and tax cuts. The extra income can be helpful to pay your bills and make a profit. But renting is not always helpful; you need to be prepared for the worst situations and be equipped to handle your tenant.
The landlord is responsible for collecting the rent, carrying out the repairs and maintenance of the home, and at the same time, checking to see if the tenants are maintaining the property efficiently to avoid unreasonable wear and tear.
2. Prepare Your Rental Property
Once you are sure that you can handle being a rental property owner, the next logical step is preparing the property. Do the research and study your area and fix the rent at a fair amount as higher rent will waive the prospective tenants off. The rent amount should be adjusted based on how you want to rent it. Decide whether you would want to rent your property out as furnished or unfurnished.
If you live in the home, you will need to dress it up a little by removing personal items and valuables out along with old and worn out things or objects. An unoccupied home allows tenants to style it as per their personal preference. The most crucial step of all is cleaning- do it yourself or hire a professional service. A clean home painted with neutral colors is an invitation for a happy life; tenants are motivated to maintain a home when handed a clean and well-kept rental property. The exterior part of your rental property should not be excluded.
Also, go ahead and make copies of all keys that the tenant may need while renting your home.
3. Market Your Home
Before finalizing the rent and entering a lease agreement, the next step and important part of finding the right tenant for the house is marketing. After cleaning and dressing up the apartment for rent, start making a list of all the essential features that make your rental property stand out. Using the right attractive adjectives to describe your home is necessary to attract potential tenants.
Many advertising and real estate experts believe that words like “state of the art, stainless steel appliance, hardwood floor, gourmet kitchen” can fetch you good tenants. Additionally, start posting an ad about your home on reputable websites and local papers.
Hiring a real estate agent is also the best way to market your home. These are professionals who have a ton of experience in renting a property and they are more acquainted with the locality and what appeals to the tenants.
4. Screen the Tenants
Before entering into a lease agreement, take some time and screen the tenants. Once you start looking for a tenant, ensure you pick only the genuine ones. Be very careful before choosing a tenant; your choice would be a deciding factor for receiving correct and timely rent.
Suppose you are renting a spare room in your home- that means the new tenant will be a flatmate and you two will need to cohabitate under the same roof. In this situation, learn and understand the work, habits, and lifestyle of the person so that you wouldn’t have to face any surprises in the future.
Also, one way to screen a tenant is getting a police verification done. You can also ask for references and check their credit history.
The bottom line: take all necessary safety precautions while screening a tenant. He/she is just a stranger. After thorough screening and negotiations, ask for a security deposit, fix the rent and payment schedule, as well as other conditions before finalizing the deal.
5. Learn the Art of Legal and Financial Requirements
As a landlord, you are also responsible for any legal obligations involved in renting a property. It is always safer to enter into a rental agreement with the tenant stating the rights or obligations of both parties. You need to be sure to uphold the current state laws. Hiring a local attorney will help you understand the rules and regulations involved; they even take care of drafting a lease agreement and all other legal formalities.
Additionally, consult with an accountant to figure out your financial situation. You may be qualified for tax deduction but knowing exactly which headings and expenses are deducted is essential. An accountant or tax attorney will be in a better position to help you in determining all the rules about renting a home.
As a property owner, it is natural to want to rent out your space. Before you do it, however, take some time and realize the duty and obligation involved with it. Renting a home is beneficial only when it is done correctly. In the end, it is your property and your responsibility.
This article has been contributed by Roxana Linda.