Renting a property out may seem like a relatively simple task, but for first timers, there’s a lot to learn.
That said, once you have a clear understanding of what’s involved, it’s a matter of working through the steps to best ensure that you attract great tenants, and everyone can have a positive experience.
Here are the critical steps to take to rent out your property for the first time.
Understand and Adhere to Legal Obligations
As a landlord, it is your responsibility to understand and adhere to the local, state, and federal laws pertaining to landlords, rental properties, and tenants. Some of the primary ones include:
- Discrimination – there are federal laws in place to prevent landlords from discriminating against tenants and applicants.
- Lease agreements – landlords must follow their state’s rules regarding lease agreements. For example, if a state law stipulates that landlords must give a five-day grace period for late rent, the lease agreement must not specify a shorter period.
- Security deposits – landlords can collect security deposits in every state, but local laws differ regarding how much you can collect, where you can hold that deposit, and more.
- Safe living conditions – landlords are responsible for maintaining a safe rental property for their tenants to inhabit. Appliances must be working, and heating, cooling, plumbing, and electricity must all be functioning well. There cannot be mold or pest infestation issues.
In addition to these, there are laws regarding repairs, tenant privacy, evicting tenants, criminal activity, and how to go about ending lease agreements.
Prepare Your Home for Tenants
In accordance with the laws and regulations that you have researched for your particular state, you can prepare your property for tenants.
The better the property’s condition is at the start of the tenancy, the better the condition you can expect/demand upon the cessation of the lease. In other words, give the property a deep clean, ensure that all appliances are in good working order, and most importantly, make sure that every aspect of the property is up to code. There are many resources online that provide checklists for rental properties, and these can help ensure that you don’t miss anything important.
If you have completed significant renovations, you may need to reassess your property value. Don’t forget to check your homeowners insurance coverage to see if you need added protection.
Determine the Rental Price
This can be tricky, as you obviously want to get the best price for your property while remaining competitive and attracting the right renter.
Take the time to do some research in your local area. You will likely find an abundance of information online, with similar properties for rent in your area to gauge a price from. If it’s hard to find any direct comparisons, it may be helpful to calculate an average of all the asking rents in your area for similar size and styled properties.
Market the Property
Once you have prepared the property for rent, it’s time to advertise it. Start by writing a listing that describes what makes the property most appealing. In addition to the standard details regarding the number of rooms, etc., include any desirable features, such as a swimming pool, hardwood floors, granite surfaces, air conditioning, etc.
Take photos of the property in sunny daylight, taking time to perfect the angles to best showcase the home. Be sure to include pictures of the features that stand out the most.
Next, you’ll need to post the advertisement. Local newspapers can still be effective, but you certainly want to make sure you get maximum coverage on reputable websites. You can also utilize the highly effective local reach of social media – Facebook marketplace for rentals is a great example of this.
Carefully Screen Prospective Tenants
It’s essential that you thoroughly screen applicants and choose your tenants extremely carefully – after all, you will be relying on them to take care of your property, pay the rent on time, and be respectful and reasonable when communicating and problem-solving with you.
You will need to gather and check references and run a check on their credit history. Many people opt to use tenant screening services for this or put their property in the hands of a property management company altogether. This may cost you around 10% of your monthly rent, but it takes a huge weight of responsibility off your shoulders, and you can learn a great deal from their expertise.
Seek Professional Guidance
Whether or not you choose the property management route, you will need to seek out professional guidance for a variety of tasks. Everything from ensuring that you are abiding by the local property rules, zoning guidelines, tax laws, etc., will require expert advice.
Real estate attorneys can assist you in navigating your state’s landlord-tenant regulations, as well as drawing up a legally binding contract that adheres to these rules. An accountant can help you identify your tax deductions and prepare your tax returns.
The internet has made it significantly easier for first-time landlords to navigate renting out their property unassisted, but it still requires a great deal of work and research. Get clear on your preferred strategy upfront for maximum efficiency and seek the guidance of a property management service if it’s all too daunting.