What to Know Before You Start Renting Your Property July 28, 2021
Many people are now looking for ways to create an alternate or passive income stream. If you’re a homeowner with extra space or an investor wanting to invest in real estate, renting your property is the best option.
However, you must consider certain factors when renting out your property. Let’s have a quick look at them.
6 Things to Consider When Renting Out Your Property
Demand for Rentals
Remember, if your purpose to rent out your home is to make money, then you must know the rent rates in your local area. You should also determine if there is any demand for rental properties. If the demand is low, you will struggle with finding tenants.
On top of that, you will be locking your cash into real estate and have no or low return on investment.
Is Your Property Rentable?
Before you put your property on the rental market, it is best to determine if it’s in appealing condition. You can check the standards by looking at other rental properties on the market and evaluate if your house is adequate or needs upgrades. A few repairs can help improve your property’s aesthetic value which will translate into improved rental rates.
Know Your Rental Law
Before you dive into the deep end of becoming a landlord, be aware of the rental laws in your area, city, or state. Check if the law in your real estate market allows you to rent out a property. Additionally, you must learn about the dos and don’ts of the tenancy agreement.
This will help you learn about your responsibilities and rights as a landlord and that of the tenants. Being aware of the law can save you from a lot of troubles such as fines, penalties, and lawsuits.
Just because you will be renting out a property, doesn’t mean you will be taking all the money home. This type of income comes with its costs such as:
- Cost to advertise the rental property
- Pay property management costs
- Carry out repair and maintenance
- Paying home insurance
Once again, market research will help you determine all these costs to make an informed decision whether renting out property is a feasible income stream for you or not.
Tenants are your source of income. Without them, you will have no return on your investment in the real estate rental business. Therefore, you must first determine where you’re going to find the tenants, and how.
Nowadays, some of the best advertisement mediums to attract tenants are:
- Online Yellow pages like services such as Yelp
- Posting an advert on Facebook
- Post an ad in a local newspaper
Know the Lease
The last elements you must focus on are the rules of writing a lease. A lease must clearly mention the following to avoid any misunderstandings or legal issues with the tenants in the future.
The components of a lease are:
- The duration of the rental lease
- Amount of security deposit
- The due date for rent and any late fees
- Rules for repairs and who is responsible for what
- Maintenance responsibilities
- Any limitations on behavior such as no party, smoking, loud noises, etc.
- Pet policy
- Any association rules the tenant must follow
- Terms and conditions for eviction or early ending of the rental agreement
While renting your property can be a great way to create an alternate income stream, it comes with certain rules to understand. Simply considering the above-mentioned rules can help you get everything right and start making money via real estate rental.
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