Learning how to rent your house may seem like a challenging undertaking, but, it comes with the highest of rewards.
When you rent your house, you will immediately take on the role identified as “landlord”. Not only will you be entitled to collecting rent, you will also have the advantage of receiving tax incentives.
You’ll be providing a home to tenants of your choice. Your house will serve as their place of comfort, their sanctuary. While renting comes with many rewards, it also comes with many responsibilities. Learning how to rent your house is important.
“Don’t wait to buy real estate, buy real estate and wait….” – Will Rogers
Step 1: Confirming Your Decision to Become a Landlord
Renting out a house for the first time might be a scary decision. When learning how to rent your house, the very first step is the decision. You are currently a homeowner. Once you confirm your decision to rent out that home, you transition to landlord status.
You will also be considered a business owner.
This means that you must adhere to all legalities associated with your property, regulations associated with rental property, and the practices that are put into place to protect both your investment and your tenants. Here are some things to consider while making your decision:
- Are you willing to allow strangers to move into a home that you have invested a lot of money – and, possibly a lot of time – into?
- Do you have the time and the level of dedication that it takes to manage a real estate business and the actual physical property associated with that business?
- Do you have the expertise to maintain the property and make the necessary repairs? If not, do you have the funds to hire outside contractors and specialists to handle these tasks for you?
- Are you willing to provide special services to tenants that are disabled or have special needs?
- Do you have the patience and personality to deal with tenants that could – potentially – be deemed “difficult”?
- Do you have a broad understanding of all of the laws and regulations in your county, state, and on a federal level surrounding landlord tenant interactions and relationships?
- Are you ready to hire the services of professionals that will help you with your real estate business, such as tax preparers, lawyers, and contractors?
If you answered “yes”, you are ready to learn how to rent your house. If you answered “no” to any of the questions, you should focus on getting to a “yes”. One of the most productive means of accomplishing this goal is to enlist the services of a property management professional.
Step 2: Seeking Out Ideal Tenants
The second step you must take when learning how to rent your house is seeking out ideal tenants. These are individuals that are capable and willing to pay the amount of rent that you require, on the time frame that you have outlined – be it weekly, bi-monthly, or monthly.
Also, you want to seek out those people that have a good credit rating, a positive reputation, and will not destroy your home or disturb those that live in or around your property.
Before seeking out tenants, become familiar with the Fair Housing Laws. These include the Civil Rights Act and the Fair Housing Act. You must not discriminate based on race, color, gender, origin, the design of the family, religion, or disability.
Step 3: The Tenant Application Process
In order to properly and legally evaluate potential tenants, you must create a standard tenant application process. You should ensure that the following is requested:
- Address
- Phone Number
- Email Address
- Social Security Number
- Length at Previous Addresses
- Contact Information for Previous Landlords
- Employment Information
- Military Status
- Income Sources and Income Verification Requirement
- Credit References
- Business References
- Personal References
On the application, you may establish certain standards for your tenants. For example, you may require the following:
- Minimum Income Requirement
- Pet Rules
- Restrictions of Certain Items, Such as Waterbeds
- Rules of Living at Your Property
- The Regulation of No Illegal Activities on Property
Step 3: Establish Financial Requirements
When learning how to rent your house, you must establish financial requirements. It is important that you set the rent at a reasonable rate. Explain to your tenant how often rent is due – is it each week or each month?
To protect yourself, it is ideal to collect the first month’s rent, as well as the last month’s rent – prior to move-in.
Additionally, you should set a reasonable security deposit. This will aid in handling any necessary repairs that may be necessary when the tenant vacates the property.
Step 4: Create a Detailed Lease Agreement
When learning how to rent your house, you must also learn how to create a detailed lease agreement. This should include the following:
- How much rent is due
- When the rent is due
- Collecting procedures
- Additional money amounts that must be paid prior to move-in
- How much notice is required to terminate the rental lease
- Disclosures about lead-based paints or other conditions that may be hazardous
- Maintenance schedules
- Rresponsibilities of the tenants
- Violations
- Illegal activities
- Late payment fees
- and other important information
The lease agreement protects you, your investment, and your tenants.
Step 5: Sign up for Property Management Services
While it is possible to learn how to rent your house and handle the business on your own, you might find it easier to procure property management services.
Not only do these services help you collect rent monies, but they assist in tenant selection, background evaluations, credit checks, property repairs, property maintenance, and the administration tasks associated with your rental property.