Landlord Insurance Policy: Have you bought a new home before selling your old one? Are you temporarily relocating for work and want to defray your costs for an empty house? Do you want to try your hand at buying investment properties? Whatever reason you have to want to rent out your house, the goal is always to do it quickly and start making money. That said, it usually pays in time, hassles, and money to conduct your due diligence in marketing your rental, choosing your tenants, and ensuring you abide by applicable laws.
Build something 100 people love, You can request publication of your article for publication by sending it to us via our Email below. Click here to start business now with businesshab.com
Landlord Insurance Policy
1. Determine comparable rents.
Ideally, of course, you want to rent your house as quickly as possible for as much money as possible. Comparing your home to similar ones for rent in your area is one of the best ways to establish your home’s rental potential.
- Search for house rentals in your area on real estate websites as well as sites such as Craigslist. Find “comps” that appear similar in size, number of bedrooms and bathrooms, age and condition, and neighborhood location. If you are comfortable doing so, you can pose as a potential renter and tour a similar house in person for comparison’s sake.
- Check back every few days to see which ads have disappeared, which probably indicates a successful rental. You can also call and ask if certain houses are still for rent. This will give you an even better idea of the price level that moves rental properties like yours.
2. Make value-adding improvements.
Before trying to rent out your house, you may feel like you need to fix up every problem, major or minor. Try, however, to focus on repairs and improvements that will bring your house in line with its “comps” and add value in higher rents.
- Make any improvements that need to be made to “bring your home up to code” — that is, meet the requirements of your local building codes. This can save you from legal trouble down the road.
- Otherwise, focus on short-term value additions like cleaning carpets, touching up paint, and replacing broken window blinds. Unless your roof is leaking, for instance, more long-term improvements like a new roof are unlikely to bring back sufficient value in increased rents.
Landlord Insurance Policy
3. Weigh the costs and benefits of renting your house.
Before jumping into making any improvements or putting out your advertising, make a realistic appraisal of your likely rental income. Weigh this benefit against the potential costs — not only monetary ones, but also the possible headaches and hassles you may face as a landlord.
- Once you establish the prevailing rent for homes like yours in the area, consider closely whether this amount is sufficient to be worth your time and effort.
- If you are new to renting out property, or are concerned with your time or ability to deal with tenants, make small repairs, and collect rental payments, you may want to consider hiring a property manager. You can let them do all the “dirty work” for you, often at the cost of half of the first month’s rent and ten percent thereafter. The money you lose may be worth your time (and sanity).
- You can negotiate how much you pay your property manager. It’s best to find a good property manager through recommendations from people you know. If you don’t know anyone with a good recommendation, interview several experienced property managers and choose the one who is most knowledgeable about the law.
Landlord Insurance Policy
4. List where people look.
The way property rentals are advertised can vary depending upon where you live. While online listings are ubiquitous by now, the sites utilized and amount of alternative advertising done may differ widely.
- Even if you don’t subscribe to a local newspaper, buy copies every so often and look at the classified ads. If you see numerous listings for comparable houses for rent, you may decide that this is a good approach for you as well.
- List your house on the site(s) where you find the most nearby and similar house rentals. Utilize social media sites and video sites as well — for instance, linking to a video tour of your home posted on YouTube.
- Studies indicate that rental ads posted on Fridays are visited more often than those posted at other times, presumably because people tend to do their house-hunting on weekends.
5. Use your house as advertising.
Some people prefer not to include an address with rental advertisements, so that they can ensure a proper showcase for potential tenants. However, there is no reason not to attract the interest of people passing by your house anyway.
- While a basic “For Rent” sign gets the message across, a professional-looking, easy-to-read, eye-catching sign can arouse much greater interest, especially if you are seeking a particular clientele. Spend time making attractive signage, or have signs printed up. Provide key information about the property (beds/baths, and perhaps one or two distinctive features like hardwood floors or a hot tub).
- If your home is empty of valuables, consider leaving the blinds open and a light on in the evening so potential tenants can peek in, especially on a showcase room (kitchen, den, etc.).
- Host an event that will draw people to your house. Hold, for instance, a yard sale and offer information and viewings to interested parties.
6. Get creative.
If you’re lucky, placing an ad, putting out a sign, and waiting may be all you need to do. More likely, though, you will need to play a more active role in attracting the right tenant to your rental quickly.
- While you may want to think twice about renting to family or close friends because it inserts a personal element into a business relationship, utilizing this network to seek out potential leads can prove helpful. Have them ask around at work or places they frequent. Ask to place flyers at local businesses you visit regularly. Utilize your social media presence, and that of friends and family.
- If you need to find a tenant quickly or you’ve been advertising with no success for a while, you may want to offer incentives beyond just reducing the rent a bit. Offer referral fees, a first-month rent discount, a share of utility costs for a period, or allow pets if you had not intended to (but can accept doing so). Draw people to at least take a look at your house, but still be selective in choosing the right tenant for your property.
Landlord Insurance Policy
7. Don’t take chances.
No matter how eager you are to rent out your house, having no tenant is almost always better than having a bad tenant, as they can cause you more headaches and costs than they are worth. Make the property more appealing to good tenants, by rent reductions or improvements, instead of loosening your tenant screening standards.
- Choosing someone to occupy your house, especially if you are going to resume living in it later (but also just to preserve its future sale or rental value), is a big decision that should not be entered into lightly.
- Establish a rational, detailed, fair (and legal) screening process beforehand to find the best tenant for your house.
8. Carefully screen applicants.
Asking a couple questions and then handing over the keys is not sufficient and invites disaster. Use your instincts regarding potential clients, but also verify all the information they provide.
- Create a standard application form, which includes spaces for name; date of birth; Social Security number; contact information; previous addresses for at least five years; current and previous employers; emergency contacts; a “release of information” statement (which permits you to follow up with past landlords and employers, etc.); and a signature. Templates are available online.
- Make sure the application is filled out completely. Charge an application fee if desired — see what is common in your area. Follow up on the information, verifying employment and income, and contacting all recent landlords.
- Pay to do a background check (the application fee can cover this). Rely on an established company to verify information about your potential tenant. Smartmove, for instance, is operated by TransUnion and offers a straightforward process.
9. Obey the law.
Even if it is not your intention, there can be a fine line between being selective in your potential tenants and appearing to be discriminatory. The last thing you need to be facing while trying to rent out your house is a federal discrimination complaint. It is your responsibility to know and obey all applicable fair housing laws.
- In the U.S., federal code prohibits housing discrimination based on race, color, sex, national origin, religion, disability, or family status. It’s best to not even ask questions along these lines.
- You cannot ask questions about marital status, how many children a family has, a person’s religion, who will share bedrooms, if a person has a disability, what a person’s disability is, or the gender of the tenants. You can ask how many people will reside in the house and let them know that anyone over 18 will be screened before they are allowed to move in.
- Keep copies of all completed applications, and put your rejection notices in writing and keep a copy. Explain clearly why you have turned down a potential tenant (insufficient income, a recent eviction for damage to an apartment, etc.).
- For the tenants you choose, provide a rental agreement that fulfills the legal requirements where you live.
- Conduct a walk-through inspection before handing over the keys, and have the tenant fill out a report that also adheres to local requirements. Take pictures for additional evidence of the condition of your house before move-in.
Landlord Insurance Policy
10. More tips
Violating the Federal Fair Housing Act or the Federal Credit Report Act could mean huge fines – whether you meant to or did so by mistake. If you’re not using the help of a property management company or a real estate salesperson, review these laws carefully online and have your lease agreement reviewed by an attorney to protect yourself.
If part of your lease is not in accordance with the law, then that part is not enforceable. However, the remainder of the lease will be enforceable.
When fixing the home, do any construction, plumbing, electrical, or window and door repairs first. Follow with painting, cleaning, and flooring repairs. If you paint first, other work may scuff the paint. If you do the flooring before any of the other steps, it can get scuffed or dirty.
- Create curb appeal by cleaning up the outside of the house, including tree branches, grass, weeds, and leaves. If you don’t keep the property clean, then your tenants may think they don’t have to, either.
- According to the Federal Credit Reporting Act, if you turn down a potential tenant, you must provide in writing a reason why. For example, if it’s because of their credit score, let them know that’s why and refer them to the credit reporting company who provided the report for further information.