6 must-know tips for homeowners renting out their property
PROTECT YOUR PROPERTY BEFORE YOU WELCOME TENANTS OR GUESTS
An unused basement, with a bit of TLC, makes a perfect income suite or rental option on your home. What’s more, with the explosion of Airbnb and their innovative business model, many homeowners have begun renting out their homes when they’re away in the hopes of increasing their cash flow. Renting out your home, when done properly, can introduce considerable additional finances into your household. This money can ultimately pay for your mortgage and often, even produce a profit.
But while there are many perks to becoming a landlord, there are also some drawbacks to the process. You may be unfamiliar with home insurance policies and other information that you should know as a landlord.
Below are 6 must-know tips to protect yourself—and your home—from damage and other issues and concerns that can arise while you are renting your property to others.
1 – FIGURE OUT YOUR GAME PLAN
First, you must mull over the many serious responsibilities and commitments that come with being a landlord. Think in depth about what is entailed before you decide if this venture is really for you. Some of these include tending to repairs, your availability to be on- site for emergencies, deciding if you need a property manager, understanding your area’s landlord-tenant laws, house insurance etc. Next, you need to figure out if you want to rent your home for short stays or on a monthly, permanent residential basis. Short stays cater to local and out of town guests that come to stay for a few days or weeks at a time. These may be seasonal rentals or a steady flow of short-stay guests throughout the year. A permanent resident will be under a lease, usually for at least a year, and pay rent to you monthly.
Now it’s time for due diligence to tackle the process of becoming a landlord. You may need to hire professionals to help you in listing your property and preparing it for the market. This includes properly staging it, taking pictures and marketing it online. If your property could use an update or needs some repairs and upgrades and you have the finances to invest, it’s always smart to make improvements. Doing so will add value to space and increase its viability. This allows you to maximize its price potential on the market. At the very least, a fresh coat of paint always makes an empty space look fresh and clean.
2 – RESEARCH THE MARKET
As with all new ventures, the first step toward successful execution is to educate yourself thoroughly. Find out what competitive pricing is in your area for rentals, and what is necessary to legally rent your home to others. Some areas have zoning laws or other legalities that will need to be handled before you can proceed. Know the ins and outs of what will be entailed as you step into the realm of becoming a landlord.
3 – GET INSURED
One of the most important investments that you will make as a landlord will be your insurance policy. Your landlord insurance policy will be your protection against most types of financial losses. These losses include liabilities from accidents that occur on your property, leading to damage or injury to other parties.
When you get ready to purchase your policy, consider the location in which the property is located, including if it’s within the confines of a flood zone, etc. This is important because policies come with basic facets and often, extra insurance must be purchased to cover these additional needs.
As a landlord, the responsibility that you are taking on is great in nature, so making sure you’re covered for almost any potential circumstance is necessary. Landlord insurance offers protection from damage, robberies, fire and other hazardous and extreme conditions that lead to financial and personal losses.
Just as with laws for landlords and tenants, insurance requirements and policy guidelines often vary according to location. Find out the minimum amount of landlord insurance you will need when you are renting out your property. If you live off the property that is being rented, landlord insurance is usually required, whereas it isn’t if you are located on site. That shouldn’t deter you from purchasing a solid landlord insurance policy. Don’t forget to consider any additional insurance that you may need as added protection and peace of mind. Home insurance quotes vary, so do some price comparisons before your final decision. You should also encourage your tenant to purchase their own renters’ insurance or tenant insurance policy.
4 – REVIEW YOUR LEGALITIES WITH A PROFESSIONAL
There are many legalities involved as a landlord. You want to make sure that you’re reporting rental income on your taxes properly, receiving the proper amount of tax breaks as a landlord and that the lease you’re offering is legally sound, protecting both you and the renter. It’s best to have a professional (preferably a lawyer) look over everything before you and your renter sign a lease.
5 – PREPARE YOUR HOME
You want to assure potential renters that you are offering the best space possible. If you’re renting for short stays, you may want to consider having a professional cleaning service on hand to cover pre and post stays for your guests. Tend to anything broken, outdated or hazardous located in and on your property. You may even want to think about installing a burglar alarm system to deter criminals and increase the value of your property, as well as get insurance breaks. Your home should be in tip-top shape and safe to rent so that you minimize any potential future issues.
6 – SCREEN POTENTIAL TENANTS
Now that you’ve started getting responses from potential tenants, it’s time to screen them thoroughly. Especially with long-term residential tenants, you want to ensure you are renting your property to someone that is trustworthy. Renting is a serious commitment and when landlord-tenant issues occur, the processes can be timely and extremely expensive. What does their background and work history entail? Do they seem flighty or are they stable? Make sure you’re opening your home to someone that will respect it and treat it as their own.
By taking the time to plan your approach to renting out property, you can ensure you offer a space that will appeal to potential tenants while protecting your investment. Start out with insurance to ensure you’re covered if and when things go wrong!