You may get positive cash flow, earn a modest stream of income or end up in the red when renting your house. After ensuring that renting your house makes financial sense, you'll need to execute the rental process correctly. This helps to ensure that your new rental business remains viable for years to come. As a landlord, you must ensure your property is safe and habitable for tenants, follow housing laws and advertise effectively. You also must carefully choose your tenants and the professionals who will help you in your rental business.
Prepare Your House for Occupancy
Electrical, roof, plumbing and structural issues become more costly with time and may disrupt a renter's tenancy. Fix health and safety issues and wear and tear before putting your house up for rent. Hire a home inspector once the home is empty and review local landlord-tenant laws to determine the scope of repairs needed. Depending on your location, rental homes may need smoke alarms, carbon monoxide detectors and fire extinguishers. Also, evaluate the condition of appliances and furnishings and clean your home thoroughly.
Hire Help If Necessary
Federal fair housing laws prohibit landlords from discriminating on the basis of disabilities, familial status, age, gender, national origin, religion or race. Also, some cities and states prohibit discrimination based on sexual orientation. A real estate agent, property manager and real estate attorney can help you prepare your home, your rental ads and your rental agreement, minimizing your liability. Agents and property managers may also have interested renters waiting for a home like yours to come on the market. A real estate appraiser can determine your home's fair market rental value to optimize your rental income.
Determine Rental Terms
Outline the tenant's responsibilities in your rental agreement. Homes usually require more maintenance than apartment rentals due to their many features, such as yards, private pools and spas and landscaping. Include how the home must be cared for. For example, is a gardener and pool service a part of the monthly rent? If the tenant is responsible for caring for the lawn and gardens, provide a list of specific maintenance and their frequency, such as watering, mowing and trimming. Upkeep is necessary if your home is part of a homeowner's association, or HOA.
Look Into Landlord Insurance
Your insurance needs changed when you put your home up for rent. Instead of homeowners insurance, you'll need landlord insurance to protect the home itself and to protect your legal and financial interests. Some policies cover you for rental losses if your home becomes uninhabitable after a covered loss. Also, because you have minimal control over daily activity on the property, you need greater liability protection in case of injuries or property damage.
Meet Local Requirements
Your city may have licensing requirements for landlords. Before tenants move in, you may need to register and obtain approval for the rental home. This usually entails an application process, one-time fees and license renewal thereafter. Unless your home meets certain minimum requirements for exemption, your property may also have to pass an inspection to ensure the home meets zoning, health and safety standards. The licensing process may also entail a certificate of occupancy which also ensures that a home meets specific standards of habitability.