Rental property is one of the most stable types of assets to have in your portfolio. Renting out your residential property can be a great way to maintain regular cash flow from tenants, tax benefits, and real estate appreciation.
Although renting out has its benefits, it still requires a lot of hard work to manage the property. Figuring out how to become a landlord takes considerable learning, planning, and preparation on how property renting works.
This article will take you through each stage of renting, from preparing your rental property to signing a residential lease agreement. Cocosign as a brand has a wide variety of templates that you can choose based on what you prefer.
Tips for Renting Your Residential Property
Before jumping into renting out your property, it’s essential to understand the process and how it works. Here are some of the basic tips to get by.
#1. Understanding Landlord-Tenant Law
Landlord-tenant relationships are legally protected at local, state, and national levels. The majority of states have specific landlord-tenant laws covering issues like property access, security deposits, and notice period for terminating a lease agreement. As a landlord, you must abide by these laws, hence the need to educate yourself about them since ignorance of the law is no defense in court.
The Fair Housing Act’s federal law prohibits discrimination against race, religion, nationality, sex, disability, and more. Such law protects renters while on the house hunt. Remember to check with the Department of Housing and Urban Development for all landlord tenants’ laws, including Federal Anti-Discrimination Law, Fair Credit Reporting Act, and Federal Housing Law.
#2. Define Rental Policies and Write a Lease
As a landlord it’s your responsibility to draft a lease agreement. A lease agreement is a legal contract between a tenant and the landlord which stipulates the terms under which the tenant can rent it. So, where can I get rental agreement form? You may ask.
CocoSign offers different samples of leases that you can download and customize to fit your specifications. Ensure the lease agreement is fully legal and doesn’t have any loopholes you left behind.
You also have tough decision to make about policies, such as:
- Will you allow pets on your property or certain pets? Is there a pet deposit?
- What is the process for breaking a lease?
- Who will do the lawn?
- Will you allow smoking in the rental property?
- Will the tenant be allowed to sublet?
#3. Make a Financial Plan
With good planning and long-term thinking, you’ll manage to rent a house and make a profit. Most landlords await to get a few hundred dollars every month. So, it’s up to you to decide whether the time and effort you put in into becoming a landlord will be worth it in your local housing market.
Don’t expect to get rich quick. The real estate business is more of an investment for the long haul. You should consider the following expenses in your budget:
- Property taxes
- Mortgage payment (if any)
- Regular maintenance
- Repairs and upgrades
#4. Determine Rental Price
You’ll have to cover your expenses; however, you can’t charge an astronomical rate, or your property will never attract renters. It’s essential to research your area’s rent. Tour properties in the neighborhood to compare housing quality and amenities.
Whatever you decide to charge for rent will determine your profitability. If you charge more, ensure your property offers more.
#5. Come Up with a Marketing Strategy
Finding a suitable tenant is crucial. Consider getting professional photography to take quality pics of the property. The higher quality of the listing images are, the more likely renters will be willing to check it out.
You can use Craigslist to list your rental property details and reach a broad selection of potential renters.
#6. Secure a Property Management Plan
If you don’t want your future tenants to call you in the middle of the night to report a pipe leakage, get a management plan. Make a plan for who will manage property all-round, from maintenance calls to fielding to checking on the rental periodically. It’s also important to define how repairs and maintenance would be handled.
You can choose to outsource and get in contract with a property management company or individual to handle everything. However, doing it yourself will maximize your investment.
#7. Screen Potential Tenants
Once you have your potential tenants narrowed down, you can conduct a background check using an online tenant screening service or do it yourself.
- Give them an application to fill: You can find a sample application online and charge them a fee to determine who is serious about renting the property. Most standard charges range between $30-$50.
- Run a credit check: You can ask for their social security number and do background checks on three main credit bureaus- Equifax, Trans Union, and Experian. This way, you ascertain which tenant is responsible for debt management and can pay rent on time.
- Confirm employment status: Ask the applicants to provide a few months’ paystubs to check if their income is enough to cover rent. Also, contact the employer and confirm if they still work there.
- Reach out to at least three references: Call their previous landlords and ask a few basic questions. Do they pay rent on time? Take care of the property? Have pets? Were they ever evicted?
There’s no sure way to guarantee success as a landlord, but taking time to educate yourself about the process increases the odds. Being a landlord is more than just collecting rent.
There’s a lot of paperwork involved, repairs, and maintenance. Getting a residential lease agreement will set things straight between you and your tenant.