Owning property and renting it out can be an excellent way to generate income. It’s not as easy as many people assume, however. If you don’t know what you are doing, it is possible to end up with tenants who don’t pay the rent on time, damage your property, or have to be evicted. To help you avoid these problems, here are some tips on renting your property the smart way.
Verify everything
Some potential tenants will give you a copy of their credit report. Don’t believe it, because some people forge these documents. Be sure to check their credit rating on your own. You need to get the applicant’s signed permission to do this when they apply for the rental, along with their Social Security number. If you want to verify the applicant’s identity, ask to see a photo ID, to make sure they are who they say they are. In some places, it’s also possible to get a criminal background check on a person.
Check past landlord references
Many landlords ask for references from current and past landlords, but not all of them check those references. It is wise to contact these landlords yourself to verify how this person was as a tenant. The older references are most important, because if the person is a terrible tenant, the current landlord could be motivated to give them a good reference just to get rid of them.
Use a solid lease
There are standard lease forms that you can purchase at an office supply store, but these may not be adequate for your needs. There are a couple of issues. First of all, every state has landlord / tenant laws that are unique, and a generic form does not cover this. Second, there can be different concerns for different types of properties, such as a duplex or a high-rise condo. Check with a local real estate office to get a better lease form.
Get deposits and proof of condition up front
You always need to have a security deposit from your tenants, which gives you some protection in case they do not properly maintain the property. Make sure you have this before they move in, so that they cannot give you a check that bounces, and you only discover it after they are already living in your rental. Either require a certified check, cash, or enough time in advance for a personal check to clear. When they do move in, take photos of the condition of the property, so that you have a basis for comparison when they move out.
Make sure you’re insured
You need to have your property insured, and you also need to have liability insurance for it. If someone has trouble in your rental house, you might find yourself being sued as the landlord, and you need to make certain you have enough coverage for this. Since your insurance generally won’t cover the belongings of your tenant in case of fire, flood or theft, you can also require your tenant to have their own renter’s insurance that covers this.
Have reasonable expectations
Investors looking to get into the real estate business should have reasonable expectations. The market is not always stable, so it’s only natural for rents to go up and down. Buying property and renting it afterwards is a lot more challenging than meets the eye. Beginners should ask for assistance from a lawyer, agent, realtor or they can easily go online and look for a free online lettings agent. The more you know about this industry, the higher chances you have to rent your properties the smart way.
Making money from your property can happen, as long as you’re willing to devote some time and some cash to making that happen. Nobody will want to rent a house that doesn’t look nice, so before spending money on ads, you might want to do some improvements. Make sure everything works; from a technical point of view, the house must be perfectly functional. Last but not least, add some flair to it: a beautiful entrance mat, some flower pots in the veranda, maybe a swing in the backyard. Believe it or not, some tenants are drawn by these small details.
