Homeowners choose to rent out houses for a number of reasons. Some buy rental houses for investment reasons. Others might need to cover mortgage payments on a home that can't seem to sell. In either case, you need to take a few steps to prepare the house for renting. This includes getting both the house and your paperwork in order.
Determine Renting Eligibility
Contact your mortgage company or financial lender if you carry a mortgage on the property. This is necessary because some mortgage agreements prohibit you from renting out a home. Once you have determined that your property can be rented out, request the approval to do so in writing from the mortgage provider.
Order an Inspection and Appraisal
Have the home inspected by a certified house inspector. This is an important step even if you feel strongly that everything in the home is in good working order. Doing so can help lower your insurance. It will also serve as a gauge to assess the house's condition after tenants move out. Consider also having a house appraisal done as well. This can also be used as a guide to determine if renters have caused costly damage to the property.
Purchase Landlord Insurance Policy
Contact your insurance agent or broker and take out a landlord policy before accepting any new tenants. Also, make sure all renters carry active renters policies.
Set Your Rental Price
Determine a rental price by calling around your neighborhood to similar properties to inquire about rental rates. Ideally, you would want your monthly rental income to cover your monthly costs, including the mortgage payment, taxes, property insurance, association fees and municipal services such as sewer and trash. Just bear in mind that the market will ultimately determine how much you can charge for rent and still attract tenants, so be prepared to settle for less than the ideal price if rates in your area are low.
Give it a Thorough Cleaning
Clean the house both inside and out. It will need to be in move-in ready before you start showing it to potential renters. Make sure the floors and counters are well scrubbed, the carpets are vacuumed, all appliances and equipment are in good working order, and the grounds are neat and well-maintained.
If you are renting a furnished home, make sure all of your furnishings and housewares are clean and in good condition. You want the house to be rented out in the exact condition you will require when the tenants move out.
Draft Appropriate Contract
Draw up lease or rental agreements by using the services of a lawyer or legal aid firm. Make sure the lease states the exact amounts renters owe, the date rent is due, what penalties are associated with late payments, the amount of the security deposit required to rent the property, the length of the rental term, and the responsibilities of the tenants to keep the home in good condition. You should also establish rules on pets, smoking, and the number of tenants.
Advertise Your Rental
Advertise the house by placing ads in newspapers, social media sites, online classified ad sites and community bulletin boards. Disclose the rental rate and when the house is available. Interview, in person, all potential renters and have them fill out an application that provides their work and contact numbers.
Call all work and personal references to confirm their information. Run a criminal background check on all potential tenants as well. You want to make sure you entrust your home to only qualified people. But make sure not to discriminate against potential renters based on color, creed, religion or nationality.
- Do not discriminate against potential renters based on color, creed, religion or nationality.