Are you looking to make a little extra money?
If so, renting out your home is a great idea. Not only can you make a lot of money by renting out your home, but unlike other side hustles, renting out your home doesn’t require a huge time commitment once you have things set up.
However, to rent out your home successfully, it’s important to understand that there are things that you should and shouldn’t do.
Read on to discover how to rent out your home.
1. Find a Quality Tenant
When it comes to renting out your home, finding a quality tenant is the key ingredient to success.
To find a quality tenant, you can’t just post an ad on Craigslist and hope for the best. Usually, it’s best to spread the word about your rental to co-workers, friends, and family members. This way, the tenant will have someone to vouch for them that you know personally.
If you’re not turning up any luck with your personal contacts, then you can extend your search for a tenant online.
The process of finding a tenant should be as formal and thorough as possible. You should make every tenant fill out an application form that lists basic information such as their first and last name, employer, references, previous landlords, and salary.
You should also ask for their social security number and have them sign a consent form that says you can perform a credit check and background check.
If you choose to hire an online agency to perform your background check, then make sure the agency you choose is accredited by the Better Business Bureau.
2. Figure Out How Much to Charge for Rent
Before you start searching for tenants, you should have a general idea of how much you’re going to charge for rent.
Choosing a price can be tricky, as you want to choose something high enough that you’ll make good money, but not so high that you won’t attract any tenants. The best way to figure out what to charge is to look up rental prices in your area for places that are comparable in size, quality, and location.
You’ll also need to decide whether or not you want to include utilities in the rent, or if you’d like to make that extra.
3. Create a Lease in Order to Protect Your Rights
A lease is a very important document that protects the rights of the tenant as well as the rights of the landlord.
The laws on leases vary by state, so it’s typically best to work with a layer to create your own lease. Your lease should include info about:
- The term of the lease: Month to month leases offer more flexibility, while year-long leases offer more stability. However, you can usually charge more by the month
- Security deposit information
- Rental due date and info on late penalties
- Rules of behavior, including but not limited to noise levels, smoking, and neighborly conduct
- Pet policies
- Homeowner association rules that the tenant must follow
- Eviction terms
- Arrangement for showings
- Who’s responsible for repairs
By spelling out all of this information, you won’t end up in a complicated legal situation with your tenant.
4. Get the Right Insurance
It’s also very important that you get the right insurance in order to protect your property.
While property insurance isn’t always cheap, it could end up saving you a lot of money in the long run. When renting out your home, you’ll need to invest in rental home insurance. This type of insurance covers your loss of rental income, medical expenses, the structure of your home, and any necessary repairs.
If you’re living on the property that you’re renting out, then you may also need to purchase a bed and breakfast insurance policy. Additionally, you should encourage your tenants to purchase renters’ insurance in order to protect their belongings.
5. Decide Whether or Not to Hire a Property Manager
Whether you live far away from your rental property or you simply don’t want to deal with the day-to-day aspects of home rental, hiring a property manager is something you’ll want to consider.
A property management company is a third-party service that will handle the day-to-day needs of both your property and your tenant. Property managers are responsible for:
- Finding a tenant
- Marketing your property
- Leasing legalities and other paperwork
- Necessary maintenance and repairs
In exchange for all of these tasks, property managers typically take a small portion of the monthly rental. Even though this amount adds up over time, it’s important to understand that property managers help take the stress out of renting out your property.
When deciding whether or not to hire a property manager, ask yourself the following questions:
- Do I have time to deal with finding tenants?
- Do I have a trusted list of handymen and other professionals who can fix things around the property?
- Am I handy enough that I can take care of day-to-day maintenance on my own?
- Do I live close to the rental property?
If you answered “no” to some of these questions, then you may want to hire an experienced rental company.
6. Consider Renting Your Property Through AirBnB or Another Vacation Rental Service
If you live in a vacation hotspot and you’re hoping to use your property yourself from time to time, then you may also want to consider renting to short-term tenants through a service such as Airbnb.
With Airbnb or other vacation rental companies, all you need to do is list your property through the company’s website and then wait for vacationers to contact you about your place.
While going this route won’t offer as consistent of income as leasing, it’s a great option for those who are looking to make some extra money from their property without doing too much work.
Are You Ready to Rent Out Your Home?
Now that you’ve read this article, you should be ready to rent out your home.
Be sure to check back in with our blog for more tips and tricks on property rental and management.