6 Tips to Renting your Home
1. Find a Good Tenant.
You can find tenants by advertising in local newspapers, both in print and online. Also spread the word through friends, relatives and coworkers through Social media.
Have potential tenants to fill out an application form, listing their basic information: name, employer, salary, previous landlords and references. You'll also need their Social Security number and signed authorization to check credit reports and criminal history.
You can do do your own background checks by:
- Pulling credit reports.
- Checking criminal history.
- Checking references, contacting employers and talking to previous landlords.
2. Determine How Much Rent to Charge.
Get an idea of rent amounts by checking newspapers, online resources or neighborhood rental signs. Be realistic about rent levels. Remember any money you receive is taxable income
3. Protect Your Rights with a Lease.
Make a written lease instead of an oral arrangement. Everyone remembers a verbal agreement differently and it is tough to prove in court.
"Have a written lease so that each party understands their rights and obligations," says Dianne Coscarelli with the American Bar Association. A good lease complies with fair housing, rental, tenant and insurance laws of your region. These laws differ across states, counties and cities, so you are safer working with a local lawyer, says Coscarelli. Avoid using blank leases from the Internet, she warns, because they may not comply with the laws of specific areas.
A lease should spell out the following:
- Lease term: A month-to-month lease offers more flexibility if you are selling, while an annual lease provides more stability if you are holding on to the property.
- Security deposit, usually one month's rent or more
- Rental due date and late penalties
- Repairs and who's responsible for what
- Routine upkeep and maintenance responsibilities, such as lawn care
- List of tenants
- Rules of behavior, including noise levels, neighborly conduct and smoking
- Pet policies and related deposits
- Who pays homeowner association dues
- Association rules that the tenant must follow
- Arrangements for showings, if you plan to put your home on the market while it's being rented
- Eviction terms, such as not paying the rent or damaging the property
4. Protect Your Property with Insurance.
"Protecting your property with the correct insurance policy is extremely important. You need a different policy if you're renting a property to a tenant versus using it as your primary residence," says Villa. "While you were living in the house, your insurance was a homeowner's policy, which covered the structure, damages and your belongings in the house. As a landlord, you'll need rental home insurance, also known as fire insurance." This policy covers your home's structure, legal costs, medical expenses and loss of rental income, if repairs are needed. Since you are not responsible for the tenant's belongings, you should encourage tenants to buy renters insurance.
5. Hire a Management Company.
Fees are charged primarily for two services: finding a tenant, which includes advertising and background checks, and managing the property. The fee for filling a house can range from 50% to 150% of one month's rent, depending on the area. Monthly management includes collecting the rent, charging late fees, handling repairs and dealing with early vacancies and evictions.
6. Prepare Properly for Evictions.
You'll need an attorney to evict a tenant. "If the tenant doesn't leave willingly, you can't just go and move their personal property and kick them out," says Coscarelli. "You have to go to court, and the sheriff needs to come out and physically remove the person if they don't move out willingly."
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