If you’re a new landlord, it can be overwhelming figuring out all the different steps you need to take before renting out a property. After all, you have to spend time advertising the property, know where to market the property, vet tenants, write a lease, and screen potential tenants. It seems like a lot! Luckily, we’ve written a guide to help you learn more about the renting process and rental business in general. Keep reading to learn more about what you should know before renting out a property.
Tip 1: Remember That Your Rental is a Business
It’s important to treat your rental property as a business, even if it’s not your main source of employment. You must be professional in all communications with your tenant and conduct your business ethically. Make sure you know all the rental laws you need to follow – including Fair Housing ordinances.
Rental investments typically have quite a few regulations, so make sure you do your due diligence and research what you’re getting yourself into.
Tip 2: Write a Sound Lease Agreement
It’s essential to write a standard lease agreement that can stand up to legal scrutiny. You don’t want to let tenants live in a property without established rules and lease terms. A rental agreement is also the best way to protect yourself if any legal situations arise.
Without a lease agreement, it would be very hard to prove certain things in court.
And remember, just like any other business, all of your lease rules need to follow specific laws. Rental agreements need to comply with state laws.
Your lease agreement is a contract that should answer the following questions (among others):
- Will pets be allowed on the rental?
- What rent amount will you charge?
- Will there be late fees for late payments? Is there a grace period?
- What security deposit amount will you charge?
- Are there any noise restrictions?
- Are there any HOA regulations that need to be specified? Guest parking rules or quiet hours, for example?
Tip 3: Consider Getting A Property Manager
A property manager is great for landlords who are too busy with their regular jobs to give proper attention to a rental property. A property manager can also market your property, find tenants, collect rent payments, and deal with any tenant issues that arise.
A property manager is also a smart choice for landlords who don’t live close by to their property. A property manager can give you peace-of-mind that your property is being dealt with professionally. But remember, as the owner and landlord, you’re still on the hook for keeping the space habitable.
Tip 4: Create a Screening Process for Potential Tenants
Finding quality tenants is essential to your rental business. After all, you want residents who will take care of your property. To find responsible people to live on your property, it’s important to take time filtering out the “bad eggs”. Look for a tenant who can comfortably pay the rent in full each month, has no criminal history, and has a great rental background.
Tip 5: Require Renters Insurance from Your Tenants
It’s incredibly important not to miss this step. When you require renters’ insurance, you can protect yourself in any court proceedings if renters’ possessions are damaged. Renters insurance is typically very affordable, so it’s not an unreasonable requirement for most tenants.
Tip 6: Ask for a Credit and Background Check
After you’ve found your potential tenants, it’s absolutely essential to get a credit and background check. A credit check can help make sure that your tenants are fiscally responsible and don’t have a history of serious debt or evictions.
Red flags you might want to watch out for include a bankruptcy filing, prior evictions, large debts, and late payments. On the other side of the coin, if a tenant comes back with a clean record and a great credit score, that’s a sign they might make a great resident.
Conclusion: Creating Your Own Rental Property Business
If you’re a new landlord, there are tons of ways you can streamline your rental business to be more efficient and profitable. The first step is to treat your rental like a business. After that, make sure you screen your tenants and create a strong rental agreement. With these tips, you’ll be on your way to a successful side business and you’ll enjoy a new stream of income.
