The thought of renting your home or even just the basement or room above the garage can stir up a lot of different feelings. You are excited about the extra income, overwhelmed over legalities, and nervous that you won’t find a good tenant. Being a landlord can be stressful, but it can also be very rewarding. These tips will help set you up for success.
1. Furnished or Unfurnished – This will play a large role in attracting a specific type of renter. Unfurnished will likely attract someone looking to stay long-term. They are probably coming from another rental and have everything they need. Furnished is ideal for students, professionals working nearby temporarily, people relocating to the area who want to take their time finding a home, and those starting over after a breakup or divorce.
2. Determine a Fair Price – Add up all of your expenses for the property. You want to make sure you charge enough to cover these expenses. Ideally, you will have a nice profit. Browse the market for similar rentals in the area to see what they are renting for.
3. Learn How to Handle Security Deposits – In addition to deciding how much to charge for a security deposit, you need to learn about local limitations and handling requirements.
4. Prescreen Inquiries – Don’t waste your time showing the space to every person who calls or emails. Prescreen them ahead of time. Maybe you want their gross monthly income to be three times more than rent and they need to provide proof of income. Perhaps you limit the number of occupants to a specific number or require phone numbers of past landlords.
5. Think About Your Application Process – It is not a bad idea to charge a nonrefundable application fee. This way, you won’t waste your time with those who are not truly interested. It will also cover the charge of obtaining a credit report. When you check their background and credit the things you are really looking for include prior felons, evictions, judgement, and bankruptcies.
6. Create a Thorough Lease – There are a lot of lease templates available online. Add any important clauses that you need to. For example, maybe the tenant is permitted to plant a garden of a specific size behind the garage or you permit pets, but they must be under a specific weight. You may also want to require that they have renter’s insurance.
Renting your home can be a pathway to extra income. When you take the time to find the right renter, you decrease your risk of being forced to deal with a lot of headaches later. Price your rental thoughtfully and decide if you want to rent it furnished or unfurnished. Lastly, clearly define all your rules, expectations, and responsibilities of both parties in the lease.