Are you ready to rent your home or apartment without the help of a rental property management company? Use this 9 step checklist to help you get started quickly.
1. Make Sure You Are Legal
First, check local laws and restrictions to ensure that you are conducting your business legally. You might need a permit or license to rent your home. Also, be sure to determine if your area requires a minimum night stay for short-term rentals.
2. Get an Insurance Policy
While you are not legally required to obtain landlord insurance, also called rental property insurance, it is highly advisable. If you have a mortgage on your property it is highly likely that your lending agency will require it anyway. These insurance policies generally cost around 25% more than a standard homeowners policy to cover the increased protections you will need. Landlord insurance usually covers property damage, liability insurance, and loss of income with other items optional for an additional cost. Landlord insurance doesn't cover everything, however; tenant personal property and basic maintenance usually are not included. Be sure to read your policy carefully to find out what is and is not covered.
3. Enlist an Accountant
In case you're not an accountant or familiar with rental tax laws, it would be wise to hire an accountant to help you sort through the tax implications of renting your house. They will help you figure out what records you'll need to keep in order to navigate Schedule-E during tax time. The accountant can also help you minimize your tax bill by recommending the right depreciation strategy.
4. Have a Lawyer Review Your Lease Agreement
Your lease agreement is necessary for your protection. Consider using an attorney to help you draw up this document or purchase one written by an attorney and intended for your state. A good lease agreement states the ways the tenants can and cannot use the property. It contains how many tenants are allowed, insurance requirements, and who pays for utilities. It should also include the exact amounts the renters owe, when rent is due, the amount of the security deposit required, the length of the rental term, and the responsibilities of the tenants to keep the home in good condition. Be sure to include what happens if the tenants' responsibilities are not met.
5. Get Your Paperwork Ready
In addition to the lease agreement, there are several other forms and documents you will need. One of these documents needs to outline the criteria your applicants need to meet in order to be able to rent your property. Use the Fair Housing Act guidelines to help with this document and have it ready to hand to applicants when you’re showing them the property. Your tenant criteria document should include acceptable monthly income levels and credit scores among other items. Other forms you will need to have ready include: rental applications, credit check authorization forms, any disclosures your state requires, move in checklists, move out forms, and various notices to tenants.
6. Get a Home Inspection
Getting a home inspection both before and after a tenant lives in your rental is beneficial in many ways. It will help you fix any maintenance issues beforehand and will help protect you from possible legal issues since you will have third-party documentation of any damage caused by the tenant. It will also likely save you from several phone calls within the first few weeks of having a new tenant and can even lower your insurance.
7. Clean, Paint, and Landscape
A little sprucing up will go a long way to enhance both curb and interior appeal and help you rent your property much more quickly. Give the property a thorough cleaning and make sure the landscaping is neat and tidy as well.
8. Determine Market Value and Get It Listed
To help you determine what market value is for your rental, utilize RentalAds.com to see what similar properties are being rented for. Ideally, you want your monthly rental income to cover all your monthly costs. A good rule of thumb is to assume that about 25% of the rent fee will be used for upkeep and maintenance, so keep that in mind when determining your asking price. You may have to settle for less depending on going rates in your area. Consider hiring a professional photographer to stage and shoot your home to present it in its best light. Write a short description of the property highlighting desirable features, amenities and area attractions. Advertise your rental by placing ads in newspapers, social media sites, online classified ad sites like RentalAds.com and community bulletin boards.
9. Screen Tenants
Once you identify a potential tenant, have them fill out an application listing their name(s), employer, previous landlords and references. It would also help you protect yourself if you note their Social Security number and get signed authorization to check their credit reports and criminal history.