Many situations might lead you to the idea that you should rent your home. Some people need to move to a different area for work or school, but they don’t want to sell their house. Or, investors look for properties that can be used as rentals to increase their monthly passive income.
Regardless of your motivation to rent the property, there are a few things that you need to consider before signing a lease with renters. Here are a few tips to help:
Choosing Good Tenants
The quality of your renters will make or break the profitability of your business efforts. If you bring in renters that don’t respect the property, then you might end up with expensive damages that need to be repaired after they are gone. Even though you have a deposit, the damages could exceed the cost of the deposit.
Ask questions to learn more about the lifestyle and habits of the tenants. Don’t be afraid to ask for recommendations or financial documents to verify that they can be consistent with the payments. Many property owners choose to run a credit check and a background check to learn more about the tenants.
Sign an Agreement
Unfortunately, a handshake deal isn’t going to cut it. Some people justify the idea that paperwork isn’t needed because they are renting the space to a friend or family member. But, too often, a misunderstanding could lead to problems with the relationship in the future.
Instead of assuming that everyone is on the same page with the rental agreement, make sure that you have a basic contract that lists the details of the rental. You can find templates online to use, or talk to anyone in the real estate industry to see if they have recommendations.
Set the Right Price
When you are preparing to advertise the rental opening, take a look at similar properties in the area. You should identify the price points for comparable homes or apartments, ensuring that you are putting the rental in a fair range for the market.
The goal is to find a “sweet spot” where you can make money on the deal without over-charging the tenants. You can enjoy the cash flow of the rental, but there isn’t any need to drive the cost so high that tenants don’t want to stay for a long time. Remember, you are still enjoying the financial benefits of having the mortgage paid down while the tenants are living in the home.
Do you want to buy a property that you can rent? There are a few unique things that you need to consider if you are looking for a rental property. For more information, talk to the experts here at DUFFY Realty: (678) 318-1700