Many people think about renting out their houses. They might want the extra income to put away money or pay off debt, or they might see it as an appealing option to sell during a housing recession and a means to hold off until the economy picks up.
The motivations are numerous, but if you don’t consider the right factors, it can end up being more hassle than its worth. The following steps will help you guide how to rent out your house or how to rent a room in your house.
Step 1: Understand the responsibility involved in renting out a house
You must first decide if becoming a landlord is a responsibility you can even handle. Renting has many advantages, including avoiding vandalism, which frequently targets empty houses, the ease of tax incentives, and the capacity to generate money that can pay the bills or debt and possibly even turn a profit.
But managing a rental property adds another responsibility to your plate, and it’s fair to expect that things won’t always go as planned. You’ll have to pay more for your homeowner’s insurance, collect rent, keep up with repairs and maintenance, and try to avert wear and tear on your house by keeping an eye on the housekeeping abilities of your tenants.
You can begin preparing for the best way to rent your house, whether you have an extra room, an in-law suite, or a house already paid for.
Step 2: Set Your Budget
Before converting your house into a residential rental property, you should create a budget.
You must include the following expenses in your budget for house expenses:
A mortgage. You must account for the monthly mortgage payment in your property budget even if you intend to have tenants cover it with rent. You may be responsible for the bill for several months between tenants. Don’t forget to include interest as well!
Repairs and Maintenance: You’re living in a fantasy if you believe your tenants won’t ever ask you to fix something. Keep aside emergency funds for the times when a water pipe bursts or the dishwasher gives up.
Upgrades and cleaning. This will be relevant, particularly between tenants. Set aside some cash for interior and exterior home renovations and deep cleaning.
Desired Rent: Check similar-sized rooms or houses for rent in your neighborhood to determine what is reasonable. If you need extra rent, consider what facilities or “freebies” you might provide to potential renters to make your place more appealing.
Step 3: Marketing Your Home
Create a list of the features that make your house attractive once it has been cleaned up so you may place it on the market.
According to RentalsOnline.com, phrases like “state-of-the-art,” granite,” vaulted ceilings,” “stainless steel appliances,” “maple,” “hardwood floors,” and “gourmet” can help you attract tenants. Use every term that applies to your house.
Post an ad for your house next on reliable websites and in your neighborhood magazines. Some real estate brokers will work with homeowners to help them rent out their houses, even while they will receive a commission if they find you a tenant.
Step 4: Talk to Your Insurance Agent
Although it seems clear, your insurance agent should know your rental motives. You might need to increase your liability insurance or insist that your new roommate acquire rental insurance, even if you only plan on renting out a single room in your already-insured home.
Successfully renting your house will be much simpler if you have a reliable, independent insurance agency.
Step 5: Write up a Rental Lease
A quick Google search for “rental lease” will yield thousands of free templates that you can use to create a rental agreement.
For example, Can your tenants drill holes in the walls for their plant hangers? Can they have pets? Can visitors stay for extended time?
The address of the property, a list of all occupants, the start and end dates of the agreement, the amount of the security deposit, and the rent should all be included in the lease.
Finally, it’s crucial to involve a lawyer. A lease is a binding contract that may have legal implications. And you must understand how to legally rent out your house.
Step 6: Find and Screen Potential Tenants
Finding a tenant is all that remains once your lawyer approves your lease. After that, pick your tenant carefully. You should depend on your tenant to maintain the good condition of your house and pay the rent timely.
Don’t forget to look over credit histories and references for potential renters. When interviewing a tenant, you should also use safety precautions because this individual is a stranger. Once you’ve found the perfect tenant, request an appropriate security deposit and set up a suitable payment schedule.
It’s time to sign the rental agreement when you’ve approved a tenant, and they’ve approved your house. Congratulations! You have now formally rented out your house.
Renting out a house or a room can benefit both the owner and the tenant. But only if you spend some time handling and preventing potential issues. After all, it is your property.