A rental house can be a great investment. Renting a house can also be a way to make mortgage payments on a property that isn’t selling easily. But if you’re thinking of renting out a house, you should know that there are vital steps to take to make the property ready for tenants.
As a landlord, it’ll be your responsibility to keep the rental house safe and in good repair. Before you put your rental ad on Craigslist, make sure you’ve repaired, updated, and cleaned the home you’re seeking to rent. You’ll need to speak to your mortgage lender before renting the house, get landlord insurance, and draw up a legally-binding lease.
Repair and Update
Before you can rent out a house, you’ll need to make any necessary repairs and updates. It’s easiest to do this when the house is empty, whether your updates are as simple as putting a fresh coat of paint on the walls or as complicated as completely renovating the kitchen and bath. While it might cost you some money initially to repair and update the property, it’ll allow you to charge more in rent, attract a higher quality of tenant, and avoid fielding a dozen repair requests during the first few weeks of your new tenant’s residence in the property.
If you’ve been living in the house, you’re probably aware of many of the problems that need fixed. Have the home inspected, and address any problems that the inspection turns up. It’s a good idea to be present for the inspection, so you can ask the inspector any questions you may have about problems with the home, such as how to get rid of mold in the basement, or how to perform a radon test. Find reliable home contractors to perform necessary updates, such as installing new windows, cleaning up the yard, and replacing outdated wiring and fixtures. Make sure that fire extinguishers, smoke detectors, and carbon monoxide detectors are up to date.
Clean
Once all repairs and updates have been made, clean the whole house thoroughly. Clean the windows and walls, countertops, floors, and cupboards inside and out. Make sure to deep-clean the entire house; don’t forget to clean light switches, ceiling fans, appliances, inside closets, and behind or under furniture if you plan to rent the house furnished. The house should be completely spotless before you begin showing it off to prospective tenants.
Contact Your Mortgage Lender
You need to get in touch with your mortgage lender to make sure that you’re allowed to rent the house under the terms of your mortgage. Get your mortgage lender to give you their approval to rent the home in writing.
Get Landlord Insurance
Contact your insurance broker to get a landlord insurance policy on the home. Submit a copy of the home inspector’s report and proof of any repairs and updates made to the home. Get the home appraised, too. These documents can help you decide how much to insure the home for, and can also serve to help you determine the extent and cost of any damage done to the home by future tenants. Make sure any tenants you rent to obtain renter’s insurance policies of their own.
Determine Your Rental Rate
Your ideal monthly rental rate will cover the costs of maintaining the rental, as well as your mortgage payment on the property, and your costs for HOA fees, property taxes, insurance, and municipal services like trash pickup, water, and sewer costs. However, your rental rate will be limited by the market rates in the area. If you charge significantly more than others in the area are charging, you’ll never find a tenant, but you don’t want to short-change yourself, either. Find out what others are charging to rent similar properties in the same neighborhood.
Draw Up Your Lease
You may want to consult a landlord-tenant lawyer in order to draw up a legally-binding lease that will protect both your interests and that of your tenant. An attorney can help you avoid common rental lease mistakes, while protecting both your own and your tenants’ rights. Basic things to include in a lease include the amount of rent to be paid and the rent due date, late-payment penalties, the amount of the required security deposit, the length of the rental term, and the terms of lease renewal. The lease should also include:
- Policies on pets and smoking on the premises;
- The names and number of residents to be allowed on the property;
- The names of tenants responsible for paying rent;
- Overnight visitor policies;
- Responsibility for the upkeep of outdoor areas, such as lawns, flowerbeds, or trees; and
- Tenants’ responsibility to keep the home in good shape.
Getting a home rent-ready is no small undertaking. From repairing and updating to cleaning and drawing up a lease, it’s a long process. But, if done right, getting your home rent-ready can help you find high-quality tenants, and make being a landlord that much easier.
