Many people have the idea that being a landlord is as simple as quitting your day job and collecting checks every month. Don't let this day dream fool you. There are several things you need to know prior to renting out your home to make sure you really want to be a landlord.
It's safe to say that, at times, things will fail to run smoothly. Although there are benefits of renting out a property, such as the tax breaks, the monthly income to help pay your bills, and the possibility of profiting, there are also plenty of responsibilities that come with the landlord title.
Stay on Top of Repairs
When preparing your home to be rented, make sure everything is in working condition. With more rentals on the market, renters are going to be choosier. Thoroughly clean your home and make sure all appliances are in good condition. Once your home is ready to rent, make a list of appealing features so you can make a great online post and so you won't be caught off guard if people come to look at the place. Also, stay mindful of the time of year during which you plan to rent. Renters generally move in particular seasons; March, April, May, June, July and August are typically the best times to locate a tenant, according to RentalsOnline.com. They also mentioned that words and adjectives that'll really help you get a renter include: "granite", "state-of-the-art", "stainless steel appliances", "vaulted ceilings", "maple", "gourmet", and "wood floors." Be sure to use any and all of the terms that apply to your home. When you find the right renters, make sure you stay on top of repairs as needed. The last thing you want is a huge list of things to fix once a tenant moves out. It is easier to afford and maintain if you fix little things as they happen.
Talk to a Professional
When becoming a new landlord it's important to make sure you are abiding by all tax laws and local property rules. Talking to a legal or tax professional can help you navigate the landlord-tenant laws, which vary from state-to-state, and help you understand your community's rules governing rental properties. They can also help you with drafting the lease, making sure that it follows local laws. Read up on some rules.
Another good question to ask a tax professional is if you qualify for tax deductions and which expenses are deductible. There are limits on how much you can deduct each year, and the amount you are able to deduct may differ with the rental activity reported on your tax return.
Set a Competitive Price
Know what other rental properties in the area are going for. Remember that potential tenants have been looking at other places and comparing prices. Make sure your price is competitive and don't forget to highlight the valuable aspects of your home.
When initially setting the price, consider the expenses associated with maintaining the property. Renting your home carries many of the same expenses that come with living in it, including mortgage payments, utilities, insurance, repairs and maintenance. Compare the costs of upkeep with that of similar properties in the area to set a reasonable price that won't leave you in the negative each month.
Screen Tenants Carefully
As soon as your home is ready to hit the market, start looking for a tenant. When choosing a tenant you need to make sure you are very careful, remember Ronald Reagan's old adage: "Trust, but verify." This needs to be a person you can depend on to pay their rent on time and also treat your property with the same respect that you would. Important things you should gather are: references, employment history, names and numbers of previous landlords, and their credit histories. Talking to people they know is a good way to guage character. Don't let your guard down during the screening process- after all this person is a complete stranger.
All in all, renting a home to a potential tenant during an economic slump is beneficial for both parties — but only if homeowners are willing to take the time to address and prevent the potential challenges with this option. After all, it's still your house and you want to protect it. Here are more helpful tips.