- Understand your area’s rental market to set a fair rate for your property.
- Research local laws and regulations before renting out the property.
- Create an official written agreement with tenants outlining the rental arrangement’s terms.
- Ensure all necessary repairs and upgrades are taken care of before renting the property.
- Update insurance policies accordingly to protect both tenant and landlord.
If you’re considering renting out your home, there are a few things you should take into consideration before leaping. Many people have found that renting their property can be incredibly lucrative. Still, it does require some work and commitment on your part.
It’s not just about posting an ad and waiting for tenants; specific responsibilities come with being a landlord. You will also need to understand the legal obligations of owning rental property. Here’s what you need to know before deciding if this is the right move for you.
Research Your Market & Location
Understanding your area’s rental market is essential to set a fair rate for your property. Research similar properties in your area and get an idea of how much they typically go for in rent. That way, you can ensure you’re getting the best possible return on investment without pricing yourself out of potential tenants.
For instance, if you know that the going rate for a two-bedroom apartment in your area is around $1,200 per month, make sure you’re not asking substantially more.
Understand Your Legal Obligations
Landlords have to adhere to certain laws and regulations set by local and state governments. Make sure you understand these laws before renting out your property. These laws vary from place to place, so do your research. In general, your obligations will include the following:
Laws & Regulations
Landlords must follow all relevant housing laws and regulations. This includes having your property inspected to ensure it meets safety standards, providing tenants with proper notification before entering the rental unit, and abiding by fair housing laws. In the UK, landlords must obtain residential energy performance certificates to demonstrate that their property meets the minimum energy efficiency standards. This is very important and should not be overlooked.
Taxes & Insurance
In addition to state and local laws, landlords must pay some federal taxes when renting out their homes. Landlords who rent out their homes for 14 days or less each year do not need to pay any taxes on the income they receive from renters; however, if they rent out the property for more than 14 days per year, then they must pay federal taxes on all of the rental income received throughout the year.
Rental Agreements & Tenants Rights
When renting out a property, it’s vital for landlords to create an official written agreement with their tenants that outlines all of the terms of the rental arrangement. The agreement should include information such as how much rent is due each month when it is due, what services are included in the monthly rent (such as utilities), who is responsible for repairs and maintenance of the home, and what happens if either party breaches the agreement.
Make Necessary Repairs & Upgrades
Before listing your home as a rental, make sure all necessary repairs and upgrades are taken care of. This will ensure that your property is up to code and safe for tenants to live in. Take into account any changes or updates that need to be made and factor these expenses into your budget when setting the monthly rent rate. Moreover, make sure the property is clean and presentable when potential tenants come to see it. The appearance of the home is key to attracting quality renters.
Update Insurance Policies
Once you list your property as a rental, it’s important to update your insurance policies accordingly. This will help protect both the tenant and yourself against any damages that may occur while someone is living on the premises. Make sure you talk with an insurance provider about what type of coverage is best suited for rentals in order to ensure everyone is properly covered in case of any accidents or natural disasters. You may also want to consider getting rental property insurance to cover any losses or damages caused by tenants.
The Bottom Line
Renting out a home can be a great way to earn extra money each month, but it also comes with its unique set of challenges and considerations. Before taking this step, research rental rates in your area, repair or upgrade any necessary aspects of the property, and update all relevant insurance policies accordingly. That way, everyone involved can rest assured knowing their needs have been taken into account before allowing others onto the premises!