What You Need to Know Before Renting Out Your Home
People rent out their homes for different reasons. Some may do it to get cash to pay debts, while others need extra money to save for future investments, among other motives. No matter your reason for renting out your house, it is essential to understand the steps to follow to benefit and experience as little trouble as possible. Use the five tips below to guide you into doing things the right way:
Gauge Yourself to Know If You Are Ready for the Responsibility of Being a Landlord
It would be best to start by determining whether you can handle the obligation of being a landlord. You will get several benefits from renting out your house, such as getting tax breaks, a way of earning some extra income, and keeping off the house from vandalism.
As a landlord, you will, however, need to be responsible for some issues in the house for things to run smoothly. For example, you’ll need to handle repairs and replacements, follow up on rent submissions and watch your tenant’s house maintenance skills to prevent wear and tear on the house. Also, you’ll have to report your rental income on your tax returns to the Internal Revenue Service. However, you can only report the rental income if you rent your house for over 15 days.
Make the House Ready for Renting
You need to check if your house needs some repairs and replacements before you start looking for a renter. Most tenants are picky because more rental houses are on the market today. Therefore, check if the appliances are in good condition, make necessary repairs, and clean the home before renting it out. If you want to rent out a part of your house, ensure you can secure it from the rest of the home.
Looking for the Right Renter
Once you confirm that the house is in perfect condition, create a list explaining its best features before advertising it. Include the most desirable appliances such as the HVAC unit, washer, dryer, lawn, and garage. Include appealing rental terms when advertising the property. For example, you can use “state-of-the-art,” “stainless steel,” “granite,” “hardwood floors,” and maple, among other terms.
However, only choose those that apply to your house. Then, select reputable sites and local advertising companies to market your rental home. You can also rent your home with a real estate agent but be ready to pay some commission. Also, you may find a property management firm to rent your house and pay them for their services.
Contract Professionals to Help You with the Financial Aspects of the Process
While you may think transforming your home to a rental property is simple, engaging professionals is essential to ensure you follow the correct procedure. Consult an accountant and a real estate attorney to know the tax and area property laws you should follow.
If you have to pay taxes, it is essential to understand your deductible expenses. Also, find out your annual deductible limits because the amount you deduct each year may differ from the rental activity your tax professional reports on your tax return.
You can hire an attorney to guide you on your state’s landlord-attorney laws because they are different for each state. The professional will also know the rules that govern rental houses in your area. Consider also getting assistance drafting the lease to ensure you do it as per the local regulations.
Find out the cost of rent for similar houses in your locality to avoid over or underpricing. Remember that people looking for rental properties will be looking for the best deals, so set your rent competitively and market your house depending on its most valuable features.
Screen the Tenants before they Sign the Contract
When you finally start looking for a renter, do it cautiously. The tenant you find should make timely rent payments and keep the home in a proper state. If you were sharing some space with the tenant, it would help to understand their habits to avoid awkward surprises.
Before allowing anyone to sign the rental contract, check their references and credit history. Also, screen the renter using proper safety precautions because the person is a stranger. After finding the right renter, let them pay the security deposit and arrange when they will be submitting the rent.
Both the property owner and renter can benefit from renting a house. However, that can only happen if you take the necessary precautions to prevent mistakes that might arise. The above tips will give you an enjoyable experience when renting out your home.