Being a landlord has several benefits.
Firstly, renting out a home means you get to have a fixed monthly, quarterly or annual income. Secondly, you get to utilize a property you might not be living in to earn some extra money. Lastly, the additional income you get from renting out a house can go into your savings (as long as you do not need it for daily necessities).
However, being a landlord also comes with its downsides, especially the fact that you have to find good tenants and make sure that everything is going okay for them. The downsides do not outweigh the benefits, though. But it is crucial to strike a balance. The best way to do so is by ensuring certain things before you decide to lease the house.
So, here are a few things you must know before renting out your primary home.
#1 Technology Will Be Your Best Ally
Using a property management or home inventory app to keep track of your inventory items is a great idea.
You can not only save time and improve efficiency but also use the inventory data for insurance coverage purposes. Inventory management apps make tracking your personal belongings in an inventory list much simpler, read more here. You do not have to remember everything that was in your possession if they are ever lost, stolen or damaged. You can simply use the app to keep track of your personal property inventory and use the inventory data when talking to an insurance company.
Similarly, you can use property management software to streamline the process of renting out your home. Whether you want to collect rent or schedule routine maintenance, such apps make it simpler.
Life as a landlord can get stressful. However, thanks to technology and mobile apps, it gets easier.
#2 Your Responsibilities As a Landlord
As a landlord, you have certain responsibilities, both to your tenant as well as your neighborhood or community. Here are some of the most important responsibilities of a landlord.
- Ensuring the house is well-maintained
- Providing safety and security
- Ensuring the house is habitable
- Adhering to building codes
- Taking care of necessary repairs
- Ensuring services like plumbing, electricity, heat and running water
- Taking complaints from neighbors into account
- Taking necessary actions against tenants who break the law
You can never ignore your responsibilities as a landlord. Not only will it make you look bad, but it will also cause problems for your neighbors. To maintain a good relationship with your tenants and neighbors, you should not avoid these responsibilities and must perform them with utmost care.
#3 Local Laws and Regulations
The local laws and regulations of the area your house is in also apply to your tenants. As the landlord, it is up to you to inform them about these rules and regulations.
While no one can blame you if your tenants break those rules, you must do your best to enforce them. So, make sure they are aware of these laws when they come to rent the place. You can also have them sign a contract that they are aware of these rules and will have to face penalties or consequences if they ever break those rules. It also gives you proof that you have indeed made them aware of the regulations.
#4 Long-Term Costs
Long-term planning and cost calculation are vital when leasing your house to a tenant. Without proper financial planning, you will have to suffer in the long run.
There are two things to remember in this regard – your costs before renting out the place and the cost you might have to bear afterward.
Before handing over the place to tenants, you have to ensure that it is in good condition. As a landlord, it is your responsibility to keep the house neat, clean and well-maintained before they arrive.
You might have to bear some expenses here. From fixing damaged floors and roof tiles to replacing fixtures, the costs for keeping the house in shape could end up troubling your wallet. However, these are necessary costs that you must bear. Otherwise, you might not find a tenant to rent out your house in the first place.
After tenants move in, you will incur additional expenses to maintain the property. In most cases, you have to cover all or some of the utility bills. You might also have to cover for additional services that come with the house like security or internet. Your tenants will eventually have to bear some, if not all, of these costs. You can add these bills to their monthly rent.
#5 Screening Tenants Is Crucial
Before renting out your house to a tenant, you must first do a thorough background check on them.
Start with the basics. It includes learning their name, age, occupation, marital or relationship status, parental address or permanent residency, etc. Afterward, you dive deeper into this information.
For instance, find out where they work and their job position if they are employed. In case they are students, ask them where they study, what they are studying and so on.
Later, move on to more serious questions, like what their daily routine is like, how long they might be out at night, how they plan on paying their rent and whether or not they will be having guests over frequently.
You might also want to talk to their existing landlords to get an idea about what they are like. Surely they would not mind you making this inquiry if they have nothing to hide.
Without a proper screening procedure, you might end up with tenants you do not like. That will not only cause you problems but can also trouble other tenants or even the neighborhood. Besides, there is also a chance that you might not get your rent on time if your tenant is flaky in any way. You do not want to incur a loss in that way.
As you can tell by now, being a landlord, although profitable, is not easy. You have to make a few sacrifices now and then, as well as make some tough decisions. However, as long as you keep these five points in mind, life as a landlord will not feel that difficult.