Turning your home into a rental property can be a smart financial decision. Whether you’ve purchased a new home, are moving in with a relative, or are embarking on a long period of travel, renting out your home can be a great way to earn a profit without a lot of upfront expense.
If you’re on the verge of your first foray into landlording, there are a few things you should know, first. Read on to learn 3 tips for renting out your home for the first time.
Decide Who You’re Looking For
If you want to find success as a landlord, the first and arguably most important step is to find a good tenant. A responsible and respectful tenant is everything in landlording; they can mean the difference between a seamless and fairly hands-off relationship, and evictions on Eviction Notice Template Alaska, court proceedings, and financial havoc.
In order to find a good tenant, you first need to define who a good tenant is. Start by creating a description of your ideal tenant. Ask yourself, at a minimum:
- How many people do you want in your home?
- How much money do they make?
- What is their credit score?
- What does their rental history look like?
- Do they have pets?
Next, create a rental application that describes who you’re looking for and lists any requirements in clear, easy-to-understand language. If you have a “must” for your tenant, list it. That way, prospective tenants can prequalify themselves before applying.
Screen Tenants Wisely
If you have an attractive property at a competitive price, interested renters will undoubtedly start flowing in. Your job is to weed out good tenants from the bad.
How do you do so? By screening them wisely. Be sure to thoroughly vet any prospective tenant prior to sending a lease agreement.
Prior to setting up any showings, verbally confirm with the renter that they meet your requirements. Next, set up an in-person viewing for your apartment. It’s imperative that you or someone you trust meets one-on-one with any potential tenant. Never sign a lease agreement with a tenant without meeting with them in person.
If the showing goes well, it’s time for your prospective tenant to apply. As part of the application process, perform a credit and background check on the applicant. Their credit check should give you a good idea of their fiscal responsibility and debts. A background check, on the other hand, will reveal any criminal history, evictions, and other pertinent information.
In addition, ask for references for both employment and previous landlords. Contact all references and ask the following questions:
- Can you confirm this person rented from/worked for you?
- Tell me about them.
- Did you have any issues with them?
- If given the chance, would you hire/rent to them again?
Pay close attention to their references’ responses. If an applicant had significant issues with a past employer or landlord, it’s probably best to pass. Another thing you should consider is getting your property insured. If you’re renting out your home, you should take a look at this article comparing landlord insurance vs homeowners insurance.
Finally, verify their income by requesting either several months of pay stubs or a last year’s tax documents.
Property management companies in Austin, Dallas, or others near you, are incredibly helpful when it comes to screening potential tenants because they evaluate each candidate with a critical eye knowing what questions to ask and how to interpret the answers; something that could prove difficult for inexperienced landlords. Furthermore, they often have access to specialized software tools that provide credit and background checks, which will help landlords make informed decisions while saving time.
Sign a Lease Agreement
If everything checks out, it’s time to sign a lease agreement.
A lease agreement is a central contract between landlord and renter. It describes all pertinent information regarding the rental. That includes details like monthly cost, rental length, payment terms, rules and regulations for use of the property, consequences if rules are broken, and so-on. It outlines exactly what both the tenant and landlord may or may not do during the duration of the lease.
Once your lease agreement is signed, it is a legally binding document. In the event that your tenant violates the lease, the lease agreement can be used in court proceedings.
No matter who your tenant is or how responsible they seem, you must always sign a lease. Never, under any circumstances, rent to a tenant based on verbal agreement alone. You must always have a signed and dated lease.
Becoming a landlord is a big responsibility. By following these 3 tips, you’ll be on your way to finding a responsible and respectful renter in no time. Good luck!