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The Do’s and Don’ts of Renting Out Your Home
In today’s struggling housing market, have you considered renting your home instead of selling it? This can either be a great decision, or a terrible one; it just depends on how you approach the idea. Here is a helpful list of some dos and don’ts when renting a home.
This is a really interesting topic. Many people have decided to try this, but it can be dangerous so here are some tips for those of you who are considering this option.
I have been a landlord for 10 years now and have owned up to 9 properties and I can tell you first hand that I have learned most of my lessons through trial and error; no one told me these things. That’s why I want to share some important tips with others.
#1 Temperament; you have to have the temperament to be a landlord.
You really need to have a good temper, and not everyone has a good temper. You need to consider whether you can be “difficult” for your tenants. Because if you act compassionately when the rent is late, then the priority of paying the rent just drops another notch. Ask yourself, “Can I sleep at night knowing that someone may not take care of the house as well as I would?” This is a big factor.
#2 Find a good tenant; it can be difficult to find the right tenant.
The number one thing to remember while you are in the process of looking for a good tenant is that it is better to have the house sit empty than it is to get the wrong tenant; because it takes months to get someone out once they’re in there. The main thing is that you do not jump at the first person who wants to live in your house. Be patient and make sure you check all the references or you will pay for it later.
#3 Reference; Who should you ask when gathering references?
I learned the hard way that you don’t just ask the current owner, you should also ask the previous owner. If the person is not a good tenant, the current landlord will tell you whatever you want to hear to get rid of them. Not only that, but you should check with the utility companies because if people don’t have a bill in their name with a utility company, they may not be a good candidate for a tenant. Utility companies know how these games are played so you should always ask for utility bills as well. You want to have a record of how they were paid and that they were consistent with their payments.
#4 The neighbors; do you know your neighbor
I was so lucky that my neighbors had my contact information one night when someone moved out at midnight because I wouldn’t have known otherwise. If you don’t know your neighbors, go around and introduce yourself to make sure they have your contact information. This way they can get a hold of you if they see anything suspicious going on in the house.
#5 Rent; How do you know what to ask for rent?
The rents change a lot and that’s why I go to Craigslist, or something like it, to find out what the going rent is for a property like yours; it really varies from week to week, and month to month depending on supply and demand. The best thing to do in this process is to charge a little less than what the rent is; you will have many more people to choose from.
#6 Leasing company; Is it better to hire a rental company or be a landlord yourself?
If you have the margin to pay for a rental company, by all means do so. They are more objective and know how things go when they evict someone. They will not get emotionally attached to their customers as sometimes the temptation is as a home owner; buy into the problems and so on. So if you have the margin is a good idea. Leasing companies typically charge about 10% of the monthly rent. So if you can do it, it doesn’t mean paying someone else to take care of it.
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