There are a few reasons why you could be interested in renting out your home. It can turn your property into a financial asset, while also paying for itself. If your rent is the right price, you can pay off your house expenses while still making some money. Renting a house is also a great option if you had to relocate temporarily and know you will be moving back into the area. Therefore, renting can be a great option. If you want to avoid the stress of managing it, a property manager is always a great option to do much of the on-the-ground work. Here are some tips for some of the details of that process.
The first issue you run into, though, is finding possible tenants. It actually isn’t as hard as it seems! Craigslist is quite popular for this (just remember to not put the exact address on the listing), or, if you want to go the old fashioned route, just put a sign in the yard.
As people apply then, you look at their information. Before you meet them in person, you should make sure they meet a set criteria, which usually includes employment, gross monthly income of 3x the rent, and a few other specifications. This way you can easily discount some unfavorable candidates.
However, do not discriminate when it comes to giving prospective tenants the application. Make sure you require an application fee (this should cover the background check), but don’t bother with the background check if the candidate does not meet any other criteria. Your application should ask for information including the applicant’s birthday, social security number, previous addresses, phone number, as well as other information. Each application should be viewed on a first-come, first-serve basis.
Learning About Your Tenants
The next step will be background and credit checks. You ultimately get to decide what you will allow each of the limits of these histories to be, but make sure to consider a few different things. For background checks, look for felonies and other criminal history. For credit checks, call their current employer and verify their job status and claims. Another resource is former landlords. Be sure to check with landlords from the previous 5 years. Make sure that there aren’t any landlords that your possible tenant did not list on their application.
When you reject a tenant, put it in writing and very clearly state your reasons for rejection. However, when you accept tenants, you can give them a call and let them know they’ve been approved.
There’s no set amount you should be charging for rent. The easiest way to figure out the range you are working with is to search houses in the area and see their rental rates. Make sure that you are viewing properties that are similar in size, location, and condition. In addition to rent, the security deposit is usually around the sum of one month of rent. Hold the security deposit in a separate location, so that you can return it to the tenant when they move out. States can limit the amount you can charge on a security deposit, so make sure you look up that information before finalizing your amount.
Your lease can vary in the time amount it binds your tenant to the property. You are also allowed to make your own stipulations in the lease. Just make sure you have all the information necessary in the lease, such as: rent amount, security deposit, laws, fees, any restrictions, etc. It can be helpful to walk through the lease with your tenant. That way you make sure they understand your conditions, and they sign each place that they need to.
Other Things to Consider
Make sure you have a property inspection before your tenant moves in. Both you and the tenant should note the condition of every room, so that when the tenant moves out, it is clear if they caused any damage to the property. Requiring renter’s insurance is another way that you can protect yourself.
For more information about renting out your house, check out the article that inspired this blog: https://www.biggerpockets.com/blog/how-to-rent-your-house