Biggest Considerations to Think About Before Renting Your Home Out

Many people look at the real estate industry as a great way to make passive income, and it truly is with rental properties. The only thing that deters people away from renting their properties out is the fact that it makes them become a landlord of those properties. And the responsibility that comes with that is the frightening part.

The scariest aspect of getting your home ready for someone else to live in it used to be the home inspections. The thought of someone coming into your home and telling you everything that’s wrong with it was absolutely dreadful because it meant that you had to pay for the necessary repairs… and the majority of the time, those repairs were quite expensive.

For example, what if you had a hard time keeping pests away? A home inspector would be able to see that and immediately inform you that your home isn’t ready to rent until you’ve permanently taken care of that problem.

But those days are long gone now… Homeowners have now embraced home inspections simply because the sooner they know what’s wrong with their home, the sooner they can get those areas fixed, and someone can move in.

That also means that the sooner someone moves in, the sooner you become a landlord.

To be fair, becoming a landlord isn’t all that bad. With a good screening of potential candidates, you don’t typically have too many issues with tenants paying rent. It’s the maintaining of the property that’s a little scary.

Once you have tenants, you are the person they come to with any repairs or property concerns. As a landlord, you have to make the decision of whether you’re going to handle those repairs yourself or if you’re going to hire a contractor to handle them for you.

If you’re going to handle them yourself, you’ll definitely need to make sure you protect yourself, your tenants, and your property with business insurance. What if you went to the property to do a minor paint job but spilled paint all over their antique rug? Painter and decorator insurance would cover the damages for that rug, if that tenant indeed wanted to claim damages.

In entering the real estate industry and renting your home out, there are so many considerations to think about, and you don’t want to go into it blindly. If you’re seriously thinking about entering the world of real estate and renting your home out, here are some of the biggest considerations to think about.

Biggest Considerations to Think About Before Renting Your Home Out

How Much Rent You Should Charge

The amount you charge in rent shouldn’t just be a number you pulled out of the air, it needs to be reflective and comparable to what’s currently on the market. You can do your research by looking at rental sites in your area and scoping rental signs within your neighborhood.

But you also have to consider any renovations, repairs, and upgrades you’ve done too. Ideally, you want your rent to cover your mortgage payments and a percentage of what it cost you to make those repairs and renovations in their monthly rent payments.

What You’re Going to Include in Your Lease

Before renting to any potential tenants, you want to make sure you provide them with a written lease agreement that outlines their rights and obligations as your tenant. To make your lease fair and just, you want to comply with the rental and insurance laws of your area. You want to make sure your lease includes:

● Pet policies and deposit amounts

● Security deposit amount

● The term of the lease

● Date the rent is due along with penalties associated with late rent payments

● What repairs the tenant is responsible for

● Behavior/noise rules

Those are just a few things you’ll want to be sure you include in your leasing agreement. It ultimately needs to outline fairness to you and your property, your tenants, and your neighbors.

What Makes a Tenant Ideal to You

Because this is your property, you’re not going to just let anyone move in without checking their credentials. There are many different ways to find a good tenant but the difficult part about it is that you’re also going to run into bad tenants as well, and you’re going to have to deny their application.

Rejected applications are where you tend to tread on thin ice simply because a denied application can be misconstrued into discrimination. The thing about discrimination is just how easy it is to be misconstrued. According to globalverificationnetwork.com, one of the best ways to legally and fairly screen your tenants while avoiding discrimination is to accept the first qualified tenant you get.

This means that this particular tenant passes your background and credit check, they can afford your monthly asking price for rent, and they have great references and a stable job. Maybe you envisioned a young couple with a few children as the ideal tenant for your home but instead, two young fraternity brothers applied and met every criterion you had…

They may not be your ideal tenant but by adopting this practice, you’ll be protected from any discrimination claims

These are just a few considerations to think about in renting your home out to potential tenants. You’ll want to consider speaking with a local real estate agent in your area to help you with the process.

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