In today’s real estate market, many homeowners are becoming landlords. This is because renting your house allows you to pay off your mortgage with an easy monthly payment and hold onto your house until the value of the property increases. It is a great investment in the long run. The biggest obstacle any investor will face is to get their property ready for a renter. As you spend so much time planning for the purchase of the property you forget that you even need to fill it with a tenant.
You need to take the right steps. This means you will have to take a little extra time and effort. Every step is critical if you want to be successful. So, here we will guide you with steps to rent your house.
Are You Ready to Rent Your House?
Before we dive into the depth of steps to rent your house, make sure you are ready to rent your home. Ask yourself the below questions, If the answer is yes, move ahead and put in the work to get to a yes.
- Is your property ready to live in?
- Have you asked the question “why you want to rent your house” to yourself?
- Have you worked on the realistic number? Have you determined if renting the house is a good decision?
- Will you work towards finding the right tenant?
- Have you decided who will manage the property? If you have decided to manage it, do you know what does that entails?
- Have you studied all the local laws pertaining to rental properties?
Know Your Liabilities
As a landlord, you must know your legal liabilities as per prevailing laws of the land. Contact any professionals who may guide you about the prevailing laws related to rental properties.
Steps to Rent Your House
Here is the overall guide with a step-by-step process to know how to rent your house.
Monthly Rent:
You cannot just randomly decide what rent you want to charge. This completely depends on the market. You will have to determine the fair market rent for your home by doing proper research of supply and demand. Generally, the rent of your house will be similar to the other rental properties within the neighborhood. Research the area rents and compare them with the figure that you have in mind. If you charge higher rents, you might lose money as tenants will be looking for the best value for their money. Few sites that you can use to do your research on how much you can charge for rent are the HUD Fair Market Rents site, Rentometer, Apartments.com, Craiglist, Facebook Marketplace, Housing.com, Nestaway, Magicbricks, QuikerHomes, and many more.
Well, there are some points you should keep in mind before you give your house on rent. Click on below link to know more.
Work on Rental Application Standards:
The rental application standards are a set of criteria that the tenants should meet to qualify to rent your house. You should have specific written standards and stick to them. These rental standards will help you to get the right tenant for your home. And if everything is documented, it will help you in case of a discrimination claim. These rental application standards should include:
- Minimum gross monthly salary
- Written proof of income to be submitted
- Work history of the tenant
- Good credit history
- References from previous landlords
- Rental history
- Smoking/Not Smoking
- Vegan/Vegetarian/Non-Vegetarian (In some societies).
Be consistent and make sure that the tenants fit your rental standards.
Renovate & Rent:
It is the landlord’s responsibility to provide a safe and healthy home for the tenants. So make sure that the house is in good condition before they show up.
- Cleanliness is important. The cleaner your home will be, the easier it will be for you to find a tenant.
- Make sure that all the rooms of the house are freshly painted.
- All the valuable and light fixtures that are unique should be taken down
- Fireproof your home
- Do all the plumbing work like fixing the leaks or the running toilet.
- Make sure the electrical wiring is safe
- You can even install smoke detectors or buy fire extinguishers.
- If the home has a chimney, you will have to show proof that it had been cleaned the last year.
Advertise the House Property:
You will have to market your house properly to get the best tenants. You might want to reach the most potential tenant as possible. You can start advertising on online sites like Craiglist, Facebook Marketplace, Trulia, Apartments.com, Yard signs. Include the best pictures of the house. Share complete details on square footage, number of bathrooms and bedrooms in the house, parking, amenities, and all the relevant information of the house. By providing all the information on the property up-front, you will get calls only from the prospective tenants. This will save your time as they might already have all the answers mentioned on the site.
You can also advertise in local newspapers, local TV channels, radio, or local web-portals etc.
Prepare Your Property & Show Each Corner:
Potential tenants must be looking at many houses. You will have to prepare your property to gets its best value.
- Clean the property well and make sure that the temperature and lighting are adequate when you show the property to the tenant
- You should consider staging your property to make it stand out.
- Show the complete property and not just some parts of the house
- Consider scheduling back-to-back showing of the property. This will save you time.
- Share the details of the house with all the rental standards, along with the rent and security deposit information in writing.
- Answer every question about the property and the lease.
- If there are already tenants staying in the house while you advertise for new tenants, by law you will have to give a 24-hour notice to the current tenants before showing the property (or applicable locally).
Hire Professionals to Help You with Financials:
Being the landlord of the property, you will have to screen tenants, negotiate on the rental price, facilitating the lease signing, collect the rent, do all the home repairs, and be the point of contact whenever any problem arises. If you want to rent your house, but do not want to take all the responsibilities, you can hire a property manager to take care of all such nitty-gritty parts of the job of the property. These property managers may charge usually 50% of the first-month rent and even 10% of every month after that. You will have to figure out if you want to hire the property manager and decide whether you can afford them.
Carry out Detailed Screening of the Tenants:
This is a very crucial step to determine if the tenant meets all the requirements of your rental criteria. A background check of the tenant will help with the complete information on the applicant’s history and will help you to determine the risk of renting to them. To save money, you can do a credit check on your own or hire a service to do this for you. There are services like Cozy who make background checks much easier. They send a link directly to the prospective tenant to complete a credit or background check. The tenant pays to get the report, fills up all the information, and decides if they want to share the information with the landlord.
Check out If a Co-signer is in Picture:
A co-signer is a person who has good credit and acts as a guarantor. If the tenant has bad credit or insufficient credit history, the co-signer takes the legal responsibility to pay the rent in case if the tenant is not able to. Co-signers can be guarantors if first-time renters cannot account for their rental history or make any commitment to pay their monthly rent and bill payments. The tenant can even require a co-signer if their monthly income is less than three times the rent. It is a way to strengthen their application and it improves their chances of approval to get the house.
Prepare Your Lease Agreement:
Ensure that you have a lease agreement well prepared before you start advertising your property to all the potential renters. It acts as a code by which your tenant will have to abide by the criteria and outline the responsibilities of both the landlord and the tenant. Mention the essentials such as Name of the tenants, address of the property, length of the lease term, rent amount, amount for the security deposit, late fee description, and provisions. It is wise to hire a lawyer to review your lease. Keep two copies handy, one for you and one for the tenant.
Clarity about Important Conditions:
As a prudent landlord, you must keep yourself well informed about certain very basic and important conditions. Not only that, you have to also educate your tenant/renter about the same, so that your tenancy passes on smoothly.
- Who will bear the repairs & maintenance costs?
- Who will bear the insurance costs? And what does it cover?
- Who will pay local authority House taxes?
- Who will pay utility charges? i.e. Electricity bill, Water bill etc.
- Conditions relating to vacating the premises?
- Who will bear the society’s maintenance charges, society’s club membership fees etc?
Choose Your New Tenant Wisely:
If you reviewed the application of the new tenant, and have a good credit check and reference checks and there is nothing that is making you uncomfortable. Check whether they seem honest? Do you get a good feeling about them? Check if they won’t be too messy in the house or too picky. If you are not able to choose between two tenants, ask these questions to help you out.
- How long do they plan to stay?
- What will they do for the next couple of years?
- What is that they have liked your place than others that they must have looked at?
- What is the reason that they want to move to a new place?
- Will they sign a one year lease?
After getting answers to your questions, you will find yourself leaning towards one tenant. Select the tenant. Have them sign the rental agreement and collect your first-month rent.
Final Words
As you get your monthly rent and the security deposit and also done with the lease agreement it is important to do one thing before handing over the keys to the new tenant. Inform the local authorities and submit one copy of the lease agreement to the nearby area police station as required by the local laws. This will help to keep away any illegal activity likely to happen in the house. Check the move-in condition report of the house. Consider taking photos or videos of the property before handing over the keys to the tenant to have evidence when the tenant moves out.
Call to Action
The process to onboard a renter can be intimidating. This will get easy with every new tenant. Develop good processes for yourself and this will never be as overwhelming as you think. Hope these steps to rent your house will make your process of renting a home very easy.
Rights of Tenants | Signing Rental Agreements of Landlord
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Author Bio
Sai Charan Gundreddi – Sai Charan Gundreddy is an author and a freelance content writing specialist with over 3 years of experience in the field. A writer by day and a reader by night, he is loathe to discuss Hinderer in the third person, but can be persuaded to do so from time to time.