As a beginner in the real estate market, you’ll need to know the intricacies of putting a home up for rent. A number of responsibilities come with being a property manager or real estate agent, and your first order of business would be to identify the best way to set up your rental property. In this blog, we will be discussing how to rent a single-family home so that your experience is as smooth as possible. Let’s break it down into steps.
Step 1: Preparing your single-family home
Before you begin listing your property for rent, you need to ensure that it is up to standard. You can’t offer a sub-par home at high rent rates, so you need to decide how you want to present the property.
- Property Inspection – Hire a professional to conduct a thorough inspection. This will help identify any necessary repairs or maintenance to make future tenants more comfortable. By addressing these issues, you can make your property safe to live in and avoid any potential legal issues.
- Learning the Legal Basics – You should ideally familiarize yourself with local landlord-tenant laws and regulations. There are also local laws pertaining to running a rental business, so you would do well to learn these to ensure your property complies with all legal requirements.
- Features and Amenities – In order to make your home more attractive to potential tenants, installing necessary facilities will ensure that the property is viewed in a favorable light. You should also make the property look inviting for both photos and when tenants come to visit the property.
Step 2: Figure out the financials
Once the initial preparations are done, you should now have a good understanding of what the property is worth. You can then focus on how you’re going to manage cash flow.
- Set a Rental Price – To do this, you will need to research the local rental market to determine the average rates. You can then come up with a competitive rental price that covers your expenses and generates a profit. The location and provided amenities are two key factors that influence the price you can set.
- Lease Duration – Decide on how long you want to provide leases for. This will depend on your preference for either short-term or long-term leases, or whether you’ll offer flexibility in lease terms. Ultimately, this decision will come down to your local market. For example, if you live in an area with a large college, you should consider short-term leases since you may potentially get students as applicants.
- Security Deposit – You should also establish the value of the security deposit that will be charged. These are the funds that will be used in case of potential damages by the tenant. The general rate is one month’s rent.
Step 3: Listing the property
To entice people to apply as potential tenants, you will have to create an attractive rental listing.
- Photos and a Detailed Description – You will need clear, well-lit photos of your property’s interior and exterior to showcase its appeal. Make sure to write a comprehensive property description that highlights the rental property’s features, and amenities, as well as the benefits of living in that area.
- Listing Platforms – This listing can be uploaded on online rental platforms, social media, and real estate websites to maximize your property’s exposure.
Step 4: Screening tenant applications
Don’t rent your property to the first person you find without screening them first. This is a crucial step to ensure that you don’t face any problems with the tenant during their lease period. Screening involves:
- The Tenant Application – All applicants need to complete a detailed rental application. This will include details such as their personal information, rental history, employment details, and references.
- Conducting Background Checks – A background and credit check will help assess the applicant’s financial responsibility and rental history. This way you won’t have trouble collecting rent regularly.
- Conduct Interviews – Once applicants have been filtered, you can interview the remaining candidates to gauge their suitability and discuss any concerns or expectations.
Step 5: Preparing the Lease Agreement
The lease agreement is an important document that protects both parties. Make sure you draft up a comprehensive agreement to avoid any future legal trouble.
- Terms and Conditions – The lease agreement should have all the clauses, terms, and rules written down. The rent amount, due date, security deposit details, maintenance responsibilities, and lease duration are all important terms that need to be on the agreement.
- Review the Agreement: Once it is drafted, you should ideally have the lease agreement reviewed by a legal professional. This way you can ensure it complies with local laws and protects your interests.
Step 6: Managing Rent and Financials
You need to set up a system to manage rent payments. You should be diligent about collecting rent as you don’t want to fall into financial trouble early on. You can do this by:
- A collection system – Set up a secure rent collection system, which can be done through online platforms, checks, or direct deposits. You then need to follow up with your tenants to get them settled on a monthly basis.
- Tracking expenses – You should also keep accurate records of any income and expenses from the property. This is necessary for tax purposes.
From this point, it is just a case of rinse and repeat. There may be day-to-day issues that come up with tenants that you have to deal with, but for the most part, you only need to be diligent about rent payments.