How to Rent Your House

In its simplest terms, renting your home means that you put the money down, rent it out to other people, and collect a monthly check. Although this may seem easy, there is a lot more to this process that you need to know. Before you decide to rent your home, make sure you know the process and how it works.

Step 1: Access Your Potential Rental Situation

Do you have a spare bedroom in your home? Do you live in your home only a few months out of the year? You may be thinking of renting out your spare space or listing it on rental websites but are not sure the pros and cons of doing so. A short-term renter or a new roommate can either be a great investment or cause you more issues than profit. Welcoming new people into your home can lead to a loss of privacy or a difference in standards of cleanliness. Before deciding to rent out your space, be honest with yourself about how much you can tolerate when living with others or renting to strangers.

Step 2: Understand Your Property and the Numbers

To be a successful landlord, you need to understand your property and the expenses involved. Your rental income should cover your basic expenses, as well as any taxes and insurance. Here are some questions to ask yourself before you decide to rent out your home:

• Is it a rentable property?
• Is it located in an ideal area?
• What is my likely vacancy rate?
• What can I get per square foot in this current market?
• Will rents continue to go up?
• Do I have enough money saved for maintenance and repairs?

When you are making decisions on whether or not to own a rental, make sure you look at the current rental market for your specific location.

Step 3: Talk to Your Insurance Company Before You Start Active Rentals

Before you rent all or a portion of your home, be sure to contact your insurance company to add landlord insurance to your policy. Your insurance company will increase your coverage based on the riders that need to be added to your home insurance.

Landlord insurance typically costs between 15% and 20% more than homeowners insurance. Purchasing landlord insurance isn't a requirement to rent your home, but there are many benefits of doing so for both short-term and long-term renters.

Benefits of Landlord Insurance:

• Property damage - landlord insurance will provide coverage that helps pay for repairs to the property due to damage caused by fire, weather, or other natural disasters. This policy may also cover personal belongings such as appliances, furniture, outdoor equipment, and other items.
• Liability - this legally protects landowners from being held liable for any medical injuries the tenant may sustain while renting.
• Loss of rental income - this coverage applies when a property is damaged due to a covered event and is unable to be rented until repairs are finished.
• Optional riders you can get on your policy - vandalism, building code coverage, and burglary.

Step 4: Find Out How Much You Can Earn

When it comes down to pricing your rental, you want to make sure to include your expenses but not overcharge. Do some market research before you list your property to know what the average rate of a similar home/room is in your area. Connect with a local real estate agent to help set a rental rate that will provide you with a profit, as well as gauge the interest of renters. Always consider your amenities as well when setting a price, such as the number of bedrooms, backyard, pool, street parking, and the condition of your property. Here are three people you may want to consider hiring to make sure your rental is fully protected and running smoothly:

• Property manager - the duties of a property manager include screening tenants, handling repairs, routine maintenance, and collecting rent payments among the few.
• Attorney - owning a rental property is just like owning a business. You want your business to be protected at all times. Having an attorney on hand can help guide you through local property regulations, assist with writing a lease, and help navigate any challenging renter situations.
• Accountant - an accountant can help with filing your taxes on your rental property and find out if there are any tax deductions you qualify for.

Step 5: Security Deposits, Property Inspections, and Building Codes

All rental properties, no matter the size or the price, require a security deposit, which is essentially like collateral to protect the property. The tenant pays the security deposit to the landlord when signing the lease, and this money is used to cover any damages that may happen during their stay. When it comes time for the tenant to move out, the security deposit is refunded if the property is in the same condition as when they moved in. If the property is damaged in any way, the landlord has the right to use the security deposit to repair the damages.

Before a tenant signs their lease, it is important to do a walkthrough of the property with your future renter and perform a move-in inspection together. This is a great time for concerns to be discussed and when both the landlord and the renter can agree to the condition of the property before the move-in.

After the initial inspection with the renter, there are three other recommended inspections that landlords should do:

• Routine inspection - this is also known as the "check-in inspections" and occur annually or a few times a year. During these inspections, landlords inspect the property to ensure that everything is still in good shape. After this inspection, landlords can address any concerns they may have with the way the tenant is treating the property.
• Drive-by inspection - this type of inspection does not need to be scheduled ahead of time; it is a more casual inspection. During this inspection, a landlord inspects the outside of the property to see if there are any issues that need addressing or if it looks like a routine inspection needs to be scheduled.
• Move-out inspection - this is very similar to the move-in inspection where both the landlord and the tenant walk through the property together to compare its condition against the move-in inspection report.

In Conclusion

Before you have a renter officially move in, it is important to make sure your property is up-to-date with all of the latest building codes. Building codes apply to the inside and outside of your rental property and are the minimum safety standards a house must comply with to protect the tenant's health and safety. Here are a few common building codes and what they mean:

• Structural integrity - this applies to the safety of the property's structure, including the foundation, walls, doors, and windows.
• Mechanical integrity - this is to ensure that the heating, electrical, plumbing, and gas are running safely and in compliance with local codes.
• Sanitation - the landlord has a responsibility to supply tenants with size-appropriate garbage and recycling containers.
• Water supply - the landlord is required by the Landlord-Tenant Act to supply the tenant with clean, running hot and cold water.