RENT OWN SELL
Newyork
RENT OWN SELL
Newyork
Have you already purchased a new house and are now planning to rent out your first home? Or are you yourself a tenant and just curious about how landlords rent out their homes? Either way, the process of renting a house is interesting and insightful.
Whatever you do in life, analyzing its financial aspect is a must. Similar thinking should prevail when you plan to rent out your house. Before you think of rental income, it is wise to consider the expenses you will have by renting it out.
To put things in perspective, renting out your home is not a formula for getting rich quickly. Instead, renting out your house generates a slow but consistent income.
First things first, if you plan to get a new home to rent out, you might have to get two mortgages at the same time. Do you think you can manage both simultaneously even after factoring in rental income?
Read Also: Complete Guide On Rental Income Tax
Next, you should consider the rental income tax you are supposed to pay on any income earned from renting the property. You should also factor in the expense of regular property maintenance that will be necessary. Once you believe you can manage all of these expenses, then you may be in a good financial position to rent out your home.
You have calculated your expense. Now it’s time to look at the other side: income. The catch is that landlords look for maximum gains from renting, but setting the right rental rate is equally important. At best, you should want to have earned more rental income than what you pay in rental expenses.
The thing is you don’t have a big say in deciding what you want to charge for rent; the trends are already set in the market. Your only job is to determine the fair market rent for your house considering its features such as location, size, and condition.
You may get a fair idea by checking out the rental rates of houses with similar features in the market. However, if you are determined to set a higher rental rate, try to offer something extra to your tenants.
Apart from the financial aspect, you need to make up your mind about the additional responsibilities that come with being a landlord. Managing a property by yourself might mean getting a call in the middle of the night for leakage issues at the property.
You may either take on the responsibilities of property management or outsource them to a property manager. The property manager would be the point of contact for the tenants and would also manage their issues.
An important aspect of becoming a landlord becoming familiar with the tenant’s rights. For example, you have a responsibility to maintain the living conditions in the house; this is called a warranty of habitability.
Even though you own the property you also can’t simply walk into the house when you have tenants living there. Ethically, you are supposed to serve notice and state the reason why you need to enter the property before visiting.
You may ask your local housing authority about tenants’ rights. Apart from local laws, the federal government has also enacted laws to protect the rights of tenants. The Department of Housing and Urban Development is the go-to resource for those laws. Become familiar with the Federal Housing Law and the Federal Anti-Discrimination Law as well.
Most of the things about renting out your house may be clearer by now, but set your rental policy before you start looking for tenants. Your policy should include your expectations for how the tenants should care for your property and any other expectations you may have of the tenants. It is up to you whether you allow pets and, if you, what those restrictions and pet deposits will be.
Additionally, you’ll need to establish the responsibilities between you and your tenant as to who will manage lawn care. It may also be a good idea to include how utilities will be managed in the rental policy.
While writing your rental policy, you need to make sure that it does not conflict with the local law and that all possible loopholes are addressed. Consulting with your agent before writing the policy is the best approach.
Now you are ready to welcome a tenant into your house. Good advertising is the key to finding a suitable tenant. Having multiple rental applications to consider gives you the opportunity to screen for the most befitting tenant. You may also use online platforms to find tenants. There are dedicated websites and social media platforms where you can review and screen possible tenants.
Chances are you will find tenants to rent out your house, but if all else fails let your agent who would find you a tenant.
You are going to get multiple applications for the house. The best strategy is to do pre-screening of the rental applications. For example, you may set your rental criteria so that you can explain it to potential tenants upfront over the phone or via email.
Typical Rental Criterion Addresses:
Once you find a tenant who best meets your criteria, it’s time to sign a lease. At the signing, you should receive their security deposit which you should return towards the end of their lease if the house is well kept when they move out. You cannot use that money for personal expenses, so keep it in a separate account.
Have a final walk-through with your tenant and take photos of the house’s condition before they move in. This will prove helpful if you need to prove the tenant caused any major damage to your property when they move out.
