What we'll cover
How to conduct market research for renters
How to select tenants
The responsibilities of the landlord
In today's real estate landscape, homeowners are discovering ways to transform their properties into income-generating assets. Renting out your house has emerged as a lucrative option, allowing homeowners to transform their homes into a source of steady income.
Whether you're looking to offset mortgage payments, save for future investments or optimize your extra space, lets go over your property's potential and discover how you can maximize its value.
Read more: Use savings buckets to set aside funds for your rental property needs.
What to consider before handing over the keys
Before you entrust your property to new tenants, there are crucial considerations to keep in mind that range from selecting the right tenants to the legal obligations.
1. Property preparations
Before you put your house on the rental market, it's important to make sure that it's in tip-top shape. Start by thoroughly inspecting your property for any maintenance or repair needs. Addressing issues such as plumbing concerns, electrical issues or any damage that previously existed not only enhances the overall appeal but also avoids potential headaches down the road. Consider investing in a fresh coat of paint and professional cleaning services to make the space shine. The goal is to create a welcoming and well-maintained space that will attract responsible tenants and command competitive rental rates.
2. Rental market research
To make better decisions about your rental property, it's a good idea to have a deep understanding of the local rental market. Research comparable properties in your area to gauge the going rental rates and demand for similar homes. Factors like location, amenities and property size can greatly influence your property's rental potential.
Review rental trends over the past few years. Are rental prices steadily increasing, stable or are they experiencing fluctuations? Historical data can help you anticipate future rental income. To ensure you charge a competitive and fair rent, leverage your market research to set a rental price that aligns with both your financial goals and the expectations of prospective tenants. Consult or partner with local real estate agents who have in-depth knowledge of the rental market.
Ally Home offers a tool to help you search and compare homes in neighborhoods across the country. You can use ComeHome to see helpful insights, including rental estimates, about different properties.
3. Legal matters and rental regulations
Renting out your home involves navigating various legal obligations and regulations. This includes understanding landlord-tenant laws, local housing codes and lease agreement requirements (including the Fair Housing Act or FHA). Consulting with a legal expert or property management professional can help you draft a legally sound lease agreement that protects your interests and complies with all relevant laws.
4. Selecting the right residents
Choosing reliable tenants is perhaps the most critical aspect of renting out your home. Establish a clear and standardized application process for prospective tenants. Conduct a thorough screening, which includes employment and income verification, background checks, credit reports and rental history or references from a previous landlord. By carefully vetting prospective tenants, you reduce the risk of issues like late rent payments or property damage. Be persistent in your screening process while adhering to fair housing laws.
Additionally, establishing clear communication and expectations from the beginning sets the tone for a positive landlord-tenant relationship. Remember, selecting responsible and respectful renters is key to a stress-free rental experience.
5. Landlord responsibilities
Being a landlord comes with a set of important responsibilities that directly impact your property's success and your tenant's satisfaction. These responsibilities include maintaining the rental unit in a safe and habitable condition, ensuring your rental property complies with all building codes and safety regulations, managing lease agreements that outline the terms of the tenancy, including rent payment schedules, security deposit handling and maintenance responsibilities. Be consistent in enforcing lease terms and addressing breaches professionally. Lastly, maintain open communication with tenants and ensure their security and privacy.
Remember, renting your house out isn't just about generating income; it's about making your home work for you. A well-maintained property, clear communication and adherence to legal guidelines ultimately benefits both you and your tenants, creating a win-win situation.
