Some homeowners end up in the renting business by inheriting a house, thus being thrown into the market. On the other hand, there’s an increasing number of people that are interested in joining the market because they’ve heard that they can make a fortune. If you move out of an old home, for example, you can let someone live there in exchange for a monthly fee, but it’s not that simple. Things tend to get a bit more complicated, and you should get to know your responsibilities as a landlord as soon as possible.
Readying the Property
The second property you own, whether you moved out or recently inherited a house, needs to be in top condition. If you’re trying to rent out a place that has apparent wear and tear, you won’t have much luck. The safest decision you can make is to call plumbers and electricians to check the installations, and get in contact with a professional appraiser to find out the value of your property.
An appraiser will be able to tell you the approximate value of the home in today’s market, which is important because it influences the rent. Some landlords encourage the “1% rule”, which explains that the monthly rent should cover 1% of the value of the home. This, however, leads to a high monthly fee which few people can cover, and your home might be vacant for longer.
A safer method of calculating rent is taking into account the amount it costs you to own that property, then finding the minimum you’ll charge. The minimum rent should be able to cover expenses in terms of the mortgage, insurance, maintenance fees, property taxes, and vacancy losses. If you’re unable to cover these fees, think twice about whether you should keep the house, as you’re likely to suffer financial losses over time. When you’re ready to decide on a price tag for the property, take the market into account. If you’re going for average rent, you might not earn a fortune but more people are likely to accept the offer.
The Job Itself
What’s important to understand is that you don’t have a ‘schedule’, so to say. You aren’t expected to show up at work in the morning, and you don’t have a daily quota you’re expected to fulfill. Secondly, this is not a straightforward business. A landlord has a list of various tasks, including repairs, debt collection, sales pitching, and even playing the detective at times.
Firstly, it’s good when a landlord is good at making sales. Someone who presents a persuading offer will surely have little trouble finding a rentee. Next, when someone seems interested in your offer, you might want to put on a detective’s coat and do a little research. What should you pay attention to? Find out if they’ve been evicted before, and why, as well as their employment status. Of course, checking someone’s history doesn’t replace a good interview. Whether over the phone or in person, get in touch. Ask your future tenant if they have a pet, if they’re planning on having a roommate, and what their typical workday looks like. Nurture your relationship, as you’ll want to keep people you like around as long as possible. While some contracts last around a year, some landlords have an ongoing relationship of five, six years with their tenant. The best way to protect your investment is to know who you’re renting it to.
Landlord insurance is a worthwhile investment as it provides liability coverage if accidents happen on the property. When a tenant is hurt in the home you’re renting and you’re found legally responsible, the liability coverage will help with the medical expenses and legal fees. Something you should put on your lease as a condition for moving into your home is renters insurance. Landlord and homeowners insurance do not cover the tenant’s personal belongings, and as such, renters insurance may protect the possessions of your future rentee.
Leases are legal documents that are customized to comply with local laws, and depending on those laws, there exist differences between commercial and retail leases. There are similarities between these two types of leasing, but differences in local laws can influence certain aspects, for instance, the length of a lease. Most local housing associations have a lease template that you simply need to fill in with your information and rules. If this is not the case, what people often do is call on professional businesses, such as Chedid Storey Lawyers, to assist in drafting a lease. It is important for the job to be done by someone proficient in the field, so as to avoid future problems.
Being a landlord means being prepared for any unexpected problems that may occur. When you come over to collect rent from your tenant you could end up hearing about a leak in the plumbing. You need to decide if this is an issue that can be solved immediately, or if you need to call a plumber. The person you’re providing with a home will rely on you for help, should anything need solving. If you’ve welcomed the right kind of person into your home, the drawbacks of being a landlord are truly minimal.
While a landlord has obligations and is partially responsible for the well-being of their tenant, it can be truly rewarding work. If you’re someone who likes working with people and managing your own time – this is something you’ll enjoy. It may not be the easiest business to start in, but things will start looking better once a responsible tenant comes your way.