Some people see money in real estate, though they aren't able to purchase another property. Renting out a house is a great way to make money off of real estate property. Here are some things to know before making the decision to rent out your house!
1. Is it rentable?
- Take a look at local rentals and see what they have to offer. Determine what needs to be added or updated to make your home more appealing and able to compete with the others,
-Conduct a few repairs in order to make your house a rental property.
2. Is it in the law?
-Know whether the law in your real estate market allows homeowners to rent out homes.
-Know tenancy agreements to inspections, rent collection, terminations, and a basic understanding of Residential Tenancy Act.
-Consult a certified public account and look up all relevant tax codes related to real estate investment properties.
- Federal, State, and Local laws of real estate market and what your rights are.
3. What will it cost you?
-It may not bring in the money you think it will.
Property management, advertising, maintenance, capital gain tax, and insurance.
-Conducting real estate market analysis will help allow property investors to estimate costs of real estate investing in local real estate market.
-Know rental rates locally.
-Calculate the associates costs and set rent to determine how turning home into a rental property will affect budget.
4. Property Management
-Requires time, effort, organization, and pat attention to details!
-Ask yourself "Am I capable of managing rental property?"
- Best to hire a professional property management
- Takes care of all aspects to your rental property for a fee.
- Includes: finding tenants, advertising property, collecting rent, handling repairs, maintaining income, and taking care of evictions.
5. Finding Tenants
-If you don't go through a professional property management, picking a tenant can be a difficult and long process when you do it the right way.
- Typically renting to a friend or family is unadvisable
-Advertise income property in all ways you can think to bring people in (newspapers, social media, etc.).
-Learn how to a good tenant
-Go through all applications thoroughly, do background checks (credit report and criminal reports), contact all references!
6. Writing the Lease
-Work with a local real estate lawyer to make sure the lease is compliant with all local laws.
-No handshake deals!
-What your lease should include:
- Lease Term
- Security Deposit
- Rental due date and late penalties
- Repairs and who's responsible
- Maintenance responsibilities
- Rules of behavior
- Pet policies
- Association rules of laws which tenant must follow
- Eviction terms