What to consider before renting out your home
Aug 18, 2022

Many people ponder the idea of renting out their homes, either because they are homeless, to earn extra income and pay off debt, or they may see it as an option to sell during a housing crisis to wait until the economy improves.

The reasons are many, but this plan may become more trouble than it is worth when proper considerations are not taken. Here are five concerns that will get you in the right direction.

Understand the responsibility of being a renter
Being a homeowner comes with a series of obligations that you should consider if you can drive. While renting can bring you numerous benefits, such as avoiding the vandalism that often plagues a vacant home, the ease of tax breaks, or the ability to generate income that covers bills and possibly even makes a profit.

But being an owner is also one more responsibility that you will have to adapt to your life. For example, you’ll need to stay on top of repairs and maintenance, collect rent each month, dole out more for your homeowner’s insurance policy, and try to prevent wear and tear on your property by keeping an eye on your tenant’s cleaning skills.

You should also be aware that the Internal Revenue Service (IRS) generally requires landlords to report rental income on their tax returns.

Prepare your house for renters.
When a market is down, you may not rent the house as it is. Renters are more vigilant and selective at these times due to the greater availability of rental housing, and their expectations are much higher.

It would help prepare for the new tenant by thoroughly cleaning your home and ensuring the appliances are working and in good condition.

Marketing your home.
Once you’ve spruced up the house, please make a list of its main attractions. Highlight the most requested features like a washer and dryer, air conditioning, and a garage.

Post an ad for the house on websites and in local newspapers. Also, some real estate agents will work with landlords to help them rent out their homes, although the agent will charge a commission if they find a tenant.

Another option is to hire a property management company to handle the legwork of renting out your home, but you will have to pay them. The cost varies by company but is often between 8% and 10% of the monthly rent, and it may involve other fees.

Hire professionals to help you manage finances

Converting your home to a residential rental property is no easy task, so it’s important to talk to real estate attorneys and accountants to ensure you comply with local tax laws, zoning ordinances, and property regulations.

You can also seek help drafting the lease, making sure it complies with local laws. Finally, speaking with an attorney can help you determine the proper house rules and emergency contacts.

Establish the rental cost by comparing other rental properties that are available in the vicinity. If you want to rent your house as soon as possible, set the rent at a competitive price and be sure to highlight all the most valuable aspects of your home.

Screen tenants carefully
The search for tenants begins when your property is ready to be advertised. Choosing a tenant is a process that must be done carefully since that person will legally be in charge of your property. You should be able to depend on this person to pay your rent on time and keep your home in good condition.

 

An excellent way to know the reliability of the potential tenant is to request references and check their credit history. Take proper safety precautions when screening a tenant as they are a stranger to you. Once you’ve found the right tenant, ask for a reasonable security deposit and arrange a convenient payment schedule.

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