Renting out a property for the first time requires organization and preparation, but it can be a lucrative business move. If you’re looking to rent to new tenants, or it’s your first time as a landlord, follow this checklist to make sure you have everything in order.
Create the Perfect Lease Agreement
Take the time to craft an airtight lease agreement. Make sure you go over every necessary component of the lease: security deposit, pet policies, failure to pay consequences, damages, and conduct guidelines are a good place to start. There are a variety of sample landlord agreements available for free on the Internet, so start with a general example and alter it to your specifications.
Get a Separate Bank Account
If this is your first rental venture, it’s essential that you set up a separate bank account for any and all property transactions. For both legal and tax purposes, having your investment finances and personal finances separated will make things easier.
Get Your Insurance in Order
If you don’t already have an extensive insurance program, get one as soon as possible. Talk to your insurance broker about coverage for natural disasters, freak accidents, and sewage issues. These are often not included in general insurance plans, so it’s a good idea to check. Make sure you understand what exactly you’re liable for, and consider requiring renter’s insurance to ensure you and your tenants have the best coverage possible.
Do Necessary Repairs
Before you can rent out your property, you need to make sure all the home’s parts are in working order. Do any repairs necessary, or schedule a service provider to take care of them. Spending a little on upkeep will cost much less in the long run. Check furnaces, make sure all appliances are running correctly, and inspect the foundation. You don’t want to rent a potentially dangerous apartment out; doing so opens you up to a huge cache of legal issues. It also allows your tenants to potentially withhold rent from you until the property is serviced correctly and completely. Make sure your appliances don’t need replacing, and if they do, do it now. It’s better to have everything in top shape before you have someone move in. If you’re doing an apartment turnover, meaning you had a tenant living there before, hire a cleaning service to do a thorough scrubbing. Take photos of the conditions before your selected tenant moves in for proof should they cause any damages during their stay.
Know the Law
Don’t rent out your space and sign a lease agreement without understanding the regulations you must abide by. Beyond the Fair Housing Act, there are state and local regulations you must follow when selecting tenants and preparing the home for their use. Speak with a lawyer to understand the legality issues you need to before renting out your property. Even if you use a property management company, you are still liable for any unfollowed laws or accidents.
Use a Property Manager
If you won’t have the time to be on call for your tenants, or you simply don’t want to deal with the face to face negotiations, consider hiring a property management company. They can handle the daily ins and outs with renters, they will be well-versed in local and state ordinances, and be able to respond quickly to tenants when you aren’t able or willing.
Pick the Right Tenant
Don’t leave your property to chance and ensure the right people live in your rental. Use something like Mysmartmove tenant verification to make sure your potential tenants have a good credit history or criminal record. You can also find out if they have ever been evicted before, making the tenant selection process much easier. Doing your due diligence to pick the right tenant now will save you money, time, and a lot of stress in the future.
Have a Move-In Checklist
Once you’ve selected your tenant and move-in day arrives, make sure to draw up a move-in checklist and go through the apartment with your new renter. It should describe the condition of each room in explicit detail, and the house as a whole. This will help prevent any disputes later on with your tenant and help you determine how much of the security deposit they are owed when it’s time for them to move out.
Before you allow new tenants to stay in your property, ensure your finances, legal issues, and documentation are in order and make sure the process is as streamlined as possible.
Despite the doom and gloom that always seems to swirl around the real estate market, the fact remains that people are always going to want to buy, sell, and lease property. And while it seems like it should be a straightforward exercise — Party A has a home to sell, Party B wants to buy it — as anyone who has ever been involved in the sale or purchase of real estate can attest, the process of transferring ownership of real estate is actually far more complex.
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