Are you thinking about renting out a property? Leasing a home is an excellent way to build wealth and work towards your goals, but it's not something that should be done without careful consideration and guidance. Here are a few of the steps that you should take to avoid any financial or legal problems.
Run the Numbers
Your first step should be running the numbers. When you rent out a home, you need to consider a few factors: the amount of time the home may spend vacant, how much you'll be charging for rent, your administrative costs, repair costs, and, of course, your mortgage and property insurance. Don't forget that your property insurance will likely go up when you're renting your property, rather than living in it. Make sure that you have a solid buffer of income.
At the same time, you should be researching your local market to find out exactly how much comparable properties are going for. You don't necessarily want to be the cheapest or the most expensive.
Prepare Your Unit
Begin by cleaning the unit and consider slapping on a fresh coat of paint; painting is an easy way to make a place look brand new again. Make sure the appliances, lights, and utilities work well, and that there isn't anything broken within the unit. This includes any pantry doors, cabinets, or drawers. While you're doing this, you may want to take photos of the unit.
Put Together Your Legal Documents
Your legal documents include application forms, lease agreements, and any notices such as "late payment" notices that you might need. Remember that every state has their own lease laws; you may want to consult with a professional in the real estate industry before moving forward.
Find Your Tenants
Today, you can advertise on classified listings, in newspapers, and on third-party websites. Finding tenants is easy — finding the right tenants may be harder. Make sure to take full applications and to run background checks on any prospective tenants, as you want to make sure they can pay their rent on time.
As tenants respond to your listings, you'll need to conduct showings of the property. In high volume rental markets, you may be able to conduct all your showings at once. In lower volume, you may find yourself having to go to the property fairly frequently for one tenant. Either way, make sure to describe the major benefits of the property.
Selecting a Tenant
Once a tenant has been selected, lease agreements can be signed, and the process of move-in can begin. Now the real work of being a landlord starts: collecting payments, performing repairs, and answering emergency requests.
Need help managing your rental property? Contact us today at Aria Properties for assistance. We can answer all of your rental property questions!