Whether you're interested in a long-term investment or need to wait for your property to appreciate before you list it for sale, the money you earn by renting out your condominium can cover the costs of maintaining a home you don't use and don't want to sell. The process is much like renting out any other house, save for some condo-specific issues.
Check Your Condominium Documents
Your condominium documents, or "condo docs," contain the conditions, covenants and restrictions imposed by your community's condo association. Review the documents carefully to find out if renting is allowed and, if so, whether restrictions apply. Contact your association board if you need clarification on any point.
Know Your Market
The key to renting your unit quickly is to know market value rents and price your condo accordingly. A local real estate agent may prepare a comparative market analysis free of charge in order to establish a relationship with a landlord who might sell later. Otherwise, watch for other condos in your community to be advertised for rent and use those rates as a guide.
Research Laws & Ordinances
Research federal and state fair-housing laws and the Americans with Disabilities Act to make sure you comply with anti-discrimination laws. Also, familiarize yourself with local ordinances. Your town and county administrative offices can tell you whether they regulate rentals. Finally, learn about your state and local landlord and tenant laws so you understand your rights and responsibilities as a landlord. For example, your state likely restricts the amount of security deposit you can hold, and it almost certainly requires that you hold the security deposit in an escrow account.
Upgrade Your Insurance
Your condo insurance covers the condo and its contents, but chances are the policy applies only to owner-occupied units. A rental property needs the special coverage offered by a “dwelling policy.” Also consider protective policies that cover such equipment as furnaces; insurance for loss of rent due to damage and liability coverage to protect your assets in the event someone is injured on your property.
Consider Property Management
Decide whether you'll handle your own maintenance or hire a property manager to oversee maintenance on your behalf. Although property management services cost a percentage of the gross rent, a property manager relieves you of the burden of serving as your tenants' go-to person when things go awry.
Prepare a Rental Application & Lease
Hire a real estate attorney licensed in your state to prepare a rental application and lease. The application is an important tool for screening tenants. The lease is your contract with the tenant. Both documents must protect you, your investment and your property while treating the tenant fairly and lawfully.
Manage Your Money
Open a business bank account and set up your record-keeping and bookkeeping systems before you look for tenants. You'll need to manage and track rental income and expenses. Meticulous record-keeping will pay off at tax time, when you'll deduct expenses from your gross rent and pay tax on the net.
Spruce Up the Condo
Deferred maintenance can reduce your condo's value and make the condo less attractive to well-qualified tenants. Consider hiring a home inspector to make sure all your unit's structures and systems are in good repair. Also, paint the unit, replace damaged or stained flooring, counters and fixtures and give the property a thorough cleaning.
Advertise for Tenants
Local newspapers and Craigslist are marketing mainstays for residential rentals. Well-placed flyers can also be effective, especially if you're targeting niche markets such as students or military personnel.
Screen All Tenants
Require that applicants submit their credit reports when they turn in their applications. Contact each reference named on their applications and always verify rent payment and employment histories. Interview prospective tenants in person. Trust your instincts. Charging a modest application fee can help weed out unqualified renters.