Posted on: 9 April 2015
If you own a second home, then you might have considered renting it out for extra income. If you are planning on becoming a landlord, it is important to understand what you are getting yourself involved in. There are financial issues that you will have to understand. There are costs involved in maintaining the property. Finally, there is dealing with the tenants.
Here is an outline of the main things you need to do before you rent out your property.
Figure Out What You Will Rent The Place For
Once the lease is signed, you won't be able to raise the rates until the lease expires. So, it is important to do some research. You can use local newspapers and online classifieds to see what other properties in the area are charging. If you're looking to get tenants quickly, then you can lowball other offers.
Compare Rent To The Cost Of Maintaining The Home
However, keep in mind that you will have expenses. You should create a spreadsheet that compares the amount of money you will receive and your expenses. Remember that some unexpected expenses will occur. When the pipes burst in the middle of winter, you will be responsible for hiring an emergency plumber. If the locks break, then you're going to have to hire the locksmith.
This is why it is important to not have a very narrow profit margin. You want to have enough cushion for the emergency repairs.
Finding The Tenants
You don't want to rent to people who will fail to pay the rent. If they do, then you will find yourself in court. You can't simply change the locks and throw people out. If you do, you can be charged with wrongful eviction. That's why it's important to get background checks.
Even if they have the money, you might not want to have them as tenants. Someone who has tons of money and pays the bills, but creates havoc is not an ideal tenant. They might throw wild parties, sell drugs from the place, or destroy your home. The neighbors might complain to the police. It's better to have a stable tenant that is on a limited income, than a rich nuisance. This is why a simple credit check or proof of income is not sufficient. You want to make sure the person is not going to be a headache.
Bring In Some Help
If all of this sounds like it's a bit overwhelming, then you can hire a property management company like Rest Easy Property Management. They will handle the day-to-day operations for you. In fact, they can even screen tenants for you. You can effectively separate yourself completely from the process and have them do all of the work for you. For a fee, you can relax and not have to worry about the hassle that comes with being a landlord.Share