Although the housing market bust may have made it easy to score an affordable home in your new state, it’s frustrating to watch your old house linger on the market for months. According to the National Association of Realtors, home sales have increased 17 percent in the past year but continue to lag behind levels seen before the market collapsed. Consider turning your home into a rental, since there’s no reason for it to sit empty. Although renting out your home might bring new challenges, it’s also a great way to recoup income that can be used toward your new mortgage.
Use Rent Estimator Tools
To make your rental property a success, it’s important to set your rental prices accordingly. Making the monthly rent too low may attract a lower caliber of tenant, leading to missed payments or other frustrations. On the other hand, rent set too high makes it difficult to find tenants willing to sign or renew a lease. Begin by checking Craigslist apartment listings or other rental aggregator sites to see what other landlords are charging in your area. A tool such as Rentometer compares the rent you charge to other rentals in the area, indicating if your rent is too high or right on target.
Find a Lease to Protect Your Rights
Even if you eventually decide to rent your home to a friend or family member, it’s essential to sign a lease that protects your assets. In general, avoid getting a blank copy of a lease online, as these documents may not comply with state or local laws. To be safe, it’s best to hire a housing attorney or to consult with a local landlord association. Ensure that your lease includes the lease term (annual versus month-to-month), amount of the security deposit, rent payment due date, and who is responsible for repairs and maintenance. Other provisions, such as pet ownership or specific rules about your property, should be included in the legal documents.
Screen Tenants Thoroughly
Sure, that eager recent college grad may seem like a responsible tenant, but you may not realize that she has a terrible credit score and no source of income. To cover your bases, ask would-be tenants to fill out a thorough application that includes their name, previous addresses, contact information of previous landlord and Social Security number for credit reporting purposes. It’s also a good idea to perform an in-depth tenant screening for eviction history, sex offender status, criminal history or identity fraud. Visit AAOA (the American Apartment Owners Association) for information about performing a thorough tenant screening that meets your needs.
Sure, you have basic homeowners insurance to cover your costs in case of fire or theft. When you’re leasing to a tenant, however, it’s important to have extra protection against damages. Contact your insurance agent for quotes on rental property insurance, which should cover the home’s structure, medical expenses, personal liability and loss of rental income following a covered event. Also encourage your tenant to get rental insurance, which may protect you from a lawsuit in case of damage to the tenant’s possessions. A typical rental insurance policy covers the tenant’s belongings in case of a fire, water damage or other event.
Author: Phillip Todd
Phillip owns a handful of rental properties and stops in to check on them in between his global travels.
Article “First-Time Landlord? 4 Tips to Turn Your Home into an Easy Rental” is brought to you by Luxury Valley Homes team.