With great power comes great responsibility. This is a quote we’ve all heard by now, and surprisingly, a quote that is applicable to most situations in life – including the economic decision of renting out your home.
Renting out your home allows a flexible means of income, yes, if you immerse yourself completely in being a landlord, it may even be your source of main income. However, having the ability to provide for another individual or family’s housing, comes with a lot of responsibilities; so before deciding, look into the most common things you need to know about renting out your home first.
Renting out your home especially if you have unused property or properties is one of the best ways to utilize your space and earn a somewhat passive income. To be able to do this, we have outlined some of the most important preparations a landlord must do prior to renting out a property. If by the end of this article it all seems manageable to you then you can seriously consider renting out your home.
- Insure Your Home Before Renting It Out
Insuring the property you plan to rent out may take a big chunk out of your budget even before profit, meaning tenants, come in, but trust us, this is one of the first things you should do. You won’t always be encountering the most pleasant tenants and even if all your tenants are agreeable and pleasant, houses that have constant turnovers usually wear out faster.
Not being the one to live on your own property also poses a bigger security risk. With this, insuring your property has insurance will save you from big incidentals down the road – a few thousand dollars now is worth it than spending hundreds of thousands of dollars in the next 5-10 years.
- Keep It Professional
As much as possible, to ensure income, it is best to keep your tenants at a professional business relationship level. This includes opting to not rent out to close friends and family as this might cause too many leeway situations both on your end and on their end. By choosing tenants who are not related or close to you but are completely clean when you run a background check, you can be firm in following your contract right down to a T.
- Draft A Contract With A Lawyer Specializing In Rentals
Real estate lawyers specialize in their knowledge of the fair housing act, and the rights, and duties of both the landlord and the tenant and would be able to orient you as needed. Before considering renting out your property, we recommend you go to them at least twice. The first time is to consult with them about what you need to do, the upkeep, renovations, and the pre-renting preparations you must do to make sure you comply with everything needed. The second is to draft a tenant-landlord contract for all your tenants that plainly state the terms and conditions of their stay on your property.
- Market Your Home
Outside of the legalities, this is one of the most important things you need to do. Let’s face it, there are already a lot of housing options available for individuals who want to rent, rent-to-own, or even directly purchase a property for themselves which is why a few well-placed advertisements both online and within your local community is vital in getting tenants who will be more than willing to agree to your terms.
A useful tip when doing this is placing your advertisements and other chosen marketing materials in platforms and spaces for job placements – chances are, those who are looking for jobs within your area will see your listing and be interested in renting from you; it’s also a sure way that the one who will be renting your home has the capacity to pay consistently!
Overall, a potential landlord such as yourself should prepare to shell out a considerable sum in preparing your home for renting out as you go for renovations, fix the legalities, and invest in marketing. However, once all that is done, you’ll be surprised at how viable renting out properties are as a source of passive income. Chances are, the investment you put into the preparation will have a return on investment and even profit within just 1-3 years of you renting out your home. Just make sure to comply with all the housing regulations in your community so that there won’t be considerable fine sums and the like and you’re sure to turn a profit in no time.