renting - Free Money Wisdom

October 26, 2015 By Jon the Saver

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.

5 Pre-Application Tips to Appeal to Landlords

In today’s competitive rental market, renters must prepare to impress potential landlords. Property management companies look for a handful of qualifications to screen applicants, most of which can be attained through moderate groundwork.

Consider these five pre-application recommendations to win over landlords and property managers.

Evaluate Budget Constraints

Before applying for a rental property, make sure it is affordable. Don’t apply to apartments out of budget, even if the rent may be negotiable. Zillow allows users to search for rental homes and apartments within a designated region and price range, limiting results to practical options. Often times, landlords require income statements from potential tenants to determine whether they can afford monthly payments. Potential renters should make sure their finances are in order before applying and arrive prepared to provide documentation upon request.

Assess Records

When applying for a lease, a property management firm is most likely going to obtain a background check on potential tenants. This report includes the applicant’s credit score, criminal record, employment history and past residences. While some background scans are more extensive than others, it’s a good idea to prepare for all of the possible questions a landlord may have following a background check. If possible, take steps to build up credit before filling out a rental application. Set up online accounts for automatic bill pay to avoid missing payment deadlines. The longer bills are paid on time and in full, the higher a credit score rises. Further, increase monthly payments to eliminate as much debt as possible. Job stability also positively affects credit score, so it may be best to avoid risky career moves while attempting to build credit.

Avoid Credit Checks

If a potential renter is plagued by bad credit but needs an apartment right away, avoid property management companies requiring credit checks. As long as the tenant can prove their income level is sufficient enough to make monthly payments, the credit score shouldn’t matter. Smaller, privately-owned property management companies are less likely to run credit checks. However, most places still run criminal record checks, regardless of credit history policies.

Find References or Cosigners

References are especially important for first-time renters. Some landlords are willing to look past a bad credit report if a prospective tenant can provide positive references. Make sure those listed are relevant and unbiased, such as a coworker or manager. If the renter is involved in volunteer work, a supervisor is another good contact to put on a lease. Enlisting a co-signer is beneficial for renters with little to no credit. As long as the co-signer has a regular income and a good credit score, their signature agreeing to cover the rent if the tenant cannot assists in the approval process.

Increase Down Payment

Saving up for a higher deposit proves the applicant is serious about the apartment. This also eases the impact of a less than satisfactory credit history. The larger payment reduces property management concerns about late dues because they can deduct unpaid rent straight from the increased deposit. However, if all payments are made on time, it should be refunded in full. As with any standard lease, a portion of the deposit is intended to cover property repair costs and the sum won’t be returned to the tenant if they are liable for property damages.

Bad credit or a problematic renting background should not discourage a tenant from applying for the perfect rental. With these five preparations, many landlords are able to look past imperfect applications and feel comfortable extending leases. Renters with positive credit history looking at highly-sought properties should also use these recommendations to stand out as a low-risk, high-reward leaseholder.

By Jennifer Riner of Zillow

New Tenant Checklist for Landlords

5 Pre-Application Tips to Appeal to Landlords

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