What to Know About Renting Out Your Home

If you have found yourself pondering the idea of renting out your home there are some common difficulties that landlords may face, here are some ways to avoid them.

You’ll want to investigate the legalities of being able to rent out your home first. You will need to know about tenancy agreement to inspections, rent collection, terminations, and have an understanding of the landlord tenant laws in your area. You should also consider consulting with a CPA when it comes to tax codes.

You want to be certain you aren’t spending more than what you’re bringing in. This seems obvious, but you need to plan for what additional expenses you’ll be dealing with. Including but not limited to property taxes, insurance, maintenance, repairs, if there is still a mortgage payment, and if you choose to use a property manager. Figuring out the financial side of things will be easier if you don’t have a loan on the home, but even then, you need to get the math right in order to come out ahead. New landlords may not allocate enough money for maintenance and repairs, especially for older homes. A good suggestion is to set aside at minimum 10 percent of the rent you collect for upkeep.

You will also need to review your insurance on the home you are renting out. Homeowners insurance protects your property against disasters and mishaps, but if the tenant has an accident in the home, you may be the one footing the bill.

You might be tempted to rent your property to family or friends, but things can quickly sour when it comes to keeping relationships intact while trying to collect rent, handle repairs, or in the unfortunate circumstance of eviction. Do you have a plan for how you’ll find tenants? You don’t want to rent your home out to just anyone that fills out an application. Be diligent in conducting background checks and contacting references (especially employers and previous landlords). You will be trusting this person or persons living at your property, so you’ll want to be careful about screening your tenants.

When you are preparing to rent out your property, knowing how to write up a lease agreement is vital. A written lease will ensure that both you and your tenant understand your rights and obligations. Instead of looking up lease agreements online, you’ll want to consult with a local real estate lawyer to be certain you’re following all the laws in your area. Online templates may not include everything you need.

Hiring a property management company may not be something you think is necessary but consider the following: Do you have the time to manage the property yourself? Do you know how to find tenants, advertise, collect rent, handle repairs, and maintain the property? A professional management company can do all of this for you.