These days more homeowners are choosing to rent out their homes rather then take a loss on a sale. The ultimate goal when opting to rent out your home is to generate enough cash flow to cover the mortgage and taxes either in part or completely. Renting out your home can be a scary endeavour if you don’t know what you are doing. The best way to be successful at renting out your home is by choosing responsible tenants and being a good landlord. Here is some helpful information to help you successfully rent out your home.
The first step to renting out your home is to decide on a acceptable rental price. You want to cover the mortgage and taxes so that you don’t have to pay anything out of pocket but you can’t charge an astronomical amount for rent. In order to make sure that you are charging a decent amount is to check out the going rates on houses in or around your neighborhood that are comparable.
Once you know what other homes are going for you’ll have a better understanding of what you can realistically charge future tenants. Most landlords require first months rent, security deposit and a pet deposit at the time of signing the lease. Other landlords only require the first months rent and a security deposit. If this is your first time renting out your home you’ll need to decide on what you require from prospective renters.
Remember that this is your home and you are ultimately responsible for it. With that in mind you will need to decide on whether or not you will allow tenants to have pets, smoke indoors and who is responsible for the care of the yard. If you do decide to allow pets then requiring a pet deposit is a good idea in case their is damage to your home. The yard maintenance is something that can be worked out with the tenant. You can leave the responsibility up to the tenants to maintain the yard or hire a professional to come out but add the cost to the cost of rent.
Before you begin the process of looking for future tenants you will need to clean the house and remove all of your belongings. The house should be cleaned as if you were planning on selling it, you want it to appeal to any future tenants. Make sure all smoke detectors, appliances and outlets are in working order as well.
Now that your house is ready to be rented you will need to download and print rental applications for future tenants to fill out. You can find pre-made rental applications online to use, or visit the link below for a generic application that you can edit and change to fit your requirements. A few of the most common items to include on the rental application are: name, drivers license number, contact info, family members, previous landlords, monthly income, vehicles and pets. Have them attach a copy of their credit report to the application for you to review, if they don’t have a copy of their credit report then you can run it for them for an additional charge.
Advertise your home for rent in your local newspaper and online. It’s also a good idea to put a For Rent sign outside in case someone drives by. When advertising your home you will want to include the rent amount, location, number of bedrooms and bathrooms and a contact phone number.
Once the rental applications start coming in you will need to set aside plenty of time to review them. Call and verify rental history and employment history on any prospective tenants. When you are looking at the income you will want to make sure that the prospective tenant makes at least three times the monthly rent amount to ensure they will be able to afford the monthly rent of the home.
Once you have decided on a tenant you will need to call and let them know the good news. Set up an appointment to sit down and sign the rental agreement. The rental agreement can be either on a month-to-month bases, 6 month term or a one year lease. Once the agreement has been signed by both you and the new tenant collect the rent and deposit from them and then handover the keys.
Now that you have your house rented you will need to cancel any advertisements that you have running. Hopefully the tenant that you chose will stay in the house for awhile so that you won’t have to go through this process again.
Additional Resources: Free Rental Agreements