Renting out your dwelling can be a terrific way to enter the world of real estate, be an investment, create a tax shelter, be a wonderful stopgap when you have to relocate temporarily, or be a cost-effective way to pay the bills when you are moving and can't (or don't want to) sell your current residence. There are many reasons for renting out a dwelling. Sometimes you only want to rent the place for short terms; other times you want an ironclad lease to guarantee an income for a long period. Whatever your reasons are for renting, there are some handy tips to reduce your risk and keep your rental property one of those must-haves.
Before you even think of putting the place on the market, check out the local ordinances or homeowners association rules to make sure that you are not jeopardizing your own rights to the premises. HOAs may need to approve the residents and whose name is actually on the lease. Town ordinances may prohibit turning a private home into a transient rental site. Be sure to consult with your insurance agent and make sure that you have enough coverage to protect you if something goes awry. Ask about landlord lease insurance.
*Expectations, Limitations and Reservations
Whether you plan to make a business out of renting property or just need to be able to pay the mortgage and taxes for a home you no longer reside in, you want to make sure that your property is cared for, is kept in good condition and retains its value to attract either new tenants when the time comes or high offers when the time comes to sell it. One of the best ways to protect yourself is to have your tenant sign an official lease. Bear in mind that each state has its own guidelines for things that need to be stipulated and timelines that need to be followed, so do your homework (see sites such as LawDepot) or have a lawyer draw the form up for you.
A standard lease should contain the following specifics: rent and security deposit, length and dates of stay, who can live there, the purpose of the rental and the use of the property (e.g., personal or business), whether pets are allowed and associated fees, repairs and responsibility, a stipulation that the landlord is not liable for personal tenant property, circumstances and time to break the lease (local laws may apply), parking (if included), noise restrictions, appliances, attorney fees (if necessary), and landlord disclosures. The lease should also make clear what the tenant can or cannot do to improve or alter the property, who pays for costs associated with cleaning after the lease is up and what access the landlord or property manager has during occupancy.
*How Can You Tenant-Proof Your Property?
Even the most considerate tenant can spill or break things by accident. At the very least, there will be wear and tear during the term of the lease. There are ways to minimize any potential damage and keep the place looking attractive to the next tenant. Many experienced landlords have found that most tenants who rent attractive and well-kept homes tend to take more pride and better care of where they live.
Hardwood floors and tile floors are much more durable than carpeting in heavily trafficked rooms and easier to clean if someone spills something or walks in with muddy shoes. Replacing windows or the glass in built-in shelving and cabinets with Plexiglas will reduce the possibility of cracks, breakage and replacement. Choose heavy-duty kitchen countertops and cabinets. Providing plenty of properly wired electrical outlets will decrease the possibility that a tenant will overload an electrical outlet or string hazardous extension cords across a room. Stainless steel sinks will stand up to the banging of pots and pans better than easily chipped porcelain. If you are renting a furnished home, choose easily cleanable fabrics or use slipcovers. Make sure it is clear if you do not permit smoking on the premises.
Finally, you need to decide whether you want to play landlord or pay a property manager to watch over the residence. Property managers can handle renting, supervision and any damage that may occur.