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7 Things To Consider When Renting Your House

13059257905_330647e2fa_oThere are two simple reasons why you would consider renting your home: you have to or you want to. Perhaps you’ve tried to sell your home and can’t, you just need a short-term renter while you’re briefly away, or you want to find a new income source. Regardless of your reasons for wanting or needing to rent your home, there are many things you should first consider:

1) Decide whether to hire a management company. Management companies generally offer two services: finding tenants and managing the day-to-day responsibilities of a rental home like collecting rent and late fees, handling evictions, and repairing and maintaining the home. These companies generally charge up to 150% of one month’s rent to secure a tenant and 10-15% of the monthly rent to manage the property for the entire length of the lease. To make the best decision for your situation, you’ll need to weigh your time and energy versus your willingness to share your monthly rental income.

2) Update your insurance policy. If your current home insurance policy insures it as a primary residence only, you’ll need to change it to rental home insurance that should cover the home’s structure, legal costs, medical expenses and the loss of rental income. Since your policy will only cover the structure, you should encourage your tenants to purchase their own renters insurance policy to cover the contents.

3) Name your price. You’ll certainly want to cover your mortgage and expenses but you must also make sure that your price is competitive with other rental properties in the area.

4) Find the right tenants. Use online ads, social media and word of mouth to find your applicants. Potential tenants should provide basic information when applying as well as their social security number and permission to run a background check and credit check. You’ll also want to contact their references, especially employers and previous landlords.

5) Decide on the lease terms. Based on your rental goals, you’ll want to decide if you want to offer annual, 6 month or month-to-month leases. Along with this you’ll want to determine the required security deposit (usually 1-2 months rent) and the payment due date. You’ll also want to outline what repairs and maintenance are covered by the landlord as well as any other specifications and expectations for the tenants.

6) Write a leasing agreement. You’ll find plenty of free generic contracts online but it’s best to call in the professionals on this. Work with a local lawyer to draft your lease as rental laws vary from state to state and even from city to city or county to county.

7) Take detailed photos of your property. These photos can be used to advertise your property but more importantly to accurately show the condition of your home in case tenants ever cause damage to it. Along with photos, make thorough notes on any pre-existing damage so that you can minimize any future disputes with your renters.

Once you’ve accomplished all of the above, get your property “move-in ready” and then relax and enjoy your extra income!

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