Over the years, my husband and I have had the opportunity to manage several rental properties for family and friends as well as our own properties. These properties have ranged from single family homes to a storage facility and even a spare room in our own home. Through trial and error, we’ve learned a lot from our experiences. The following are our top five tips to make managing rental properties easy and a bit less painless for everyone involved.
Don’t Skip the Basics When It Comes to Due Diligence
Even if you are acquainted with a prospective renter, it still pays to not skip the basics. Regardless of how well you think you know your applicant, there are some very basic steps you should still follow before allowing someone to rent from you. At a minimum, follow these steps:
- Pull a credit report. If you tenant will be renting a room in your home rather than a separate property, consider conducting an online background check as well.
- Ask for references, and actually contact them before agreeing to rent to the person.
- Have a lease drawn up that specifies basics such as who is responsible for routine maintenance, repairs, as well as damages while the person is renting from you. The lease should specify how much notice should be given before the renter moves out, as well as specify any fees or penalties, including potential cancellation of the lease, should the renter be late with payments or fail to make them.
- Collect the first and last month’s rent up front, as well as a security deposit for any potential damages.
Have a Plan for Maintenance and Repairs Before You Begin Renting Your Property
Even if you consider yourself pretty handy with a hammer and a paint brush, check into what resources are available in the local area of your rental property for things such as plumbing, electrical, and septic repairs, and make certain that you keep the contact information handy. This is especially true if you have several properties to manage and have other responsibilities, or if you live some distance from the rental property.
My husband and I are both fairly adept at making simple repairs to drywall, or replacing a broken seal on the water closet, but a few years ago, we lived quite some distance away from one of the houses that we helped a family member to rent. When a tenant needed a leaking faucet as well as a broken seal on the toilet replaced, it was difficult to have the time to leave our other job, and drive five hours to take care of this. In the long run, it would have been cheaper, and quicker, to have just paid a local contractor to take of it.
Leaving basic repairs undone for an extended period of time, such as repairs to the plumbing, or even walkways if it is in a hazardous condition, can actually give your tenant the power to break the lease, and possibly leave you open for legal liability.
Don’t Neglect Apps When It Comes to Listing Your Rental Property
Several years ago, most of us relied on word of mouth, or listings in a newspaper or with an area real estate agency to find potential renters for our properties. The Internet and popular apps are radically changing every aspect of our lives, including how we list and find rental properties.
Internet sites such as Craigslist allow you to list your rental property without charge, as can local Facebook groups. There are also popular apps such as AirBnB that can help you list as well as find rooms for short term stays as well as traditional long term leases in over 36,000 locations worldwide. You can search online, as well as download the site’s iPhone compatible app to begin listing and searching for rental properties today. These are just two sites that allow you to list and search for rental properties, but there are many more and you can find them by searching online.
Don’t Forget to Contact Your Insurance Company Before You Rent Your Property
It’s important that you let your insurance company know that you will be renting the property before you begin to do so. If the property has a regular homeowner’s policy, you may need to purchase additional coverage to ensure that the property will still be covered since it is being rented.
You will also want to let your renter know that they will need to purchase their own renter’s insurance to cover any damages to their personal property and belongings should something catastrophic, such as a fire, occur. It’s a good idea to specify this notification in the lease paperwork as well.
If you rent out a private residence without letting your insurance company know first, and something does happen, they may not cover the loss.
Check With Your Local Zoning Board or Home Owner’s Association Before You Rent Your Property
Before you begin renting a residence, it’s also a good idea to check your local zoning ordinances and any applicable home owners association before you sign a lease with a tenant. It’s possible that there may be certain restrictions and covenants that would prohibit you from leasing your home.
If you are notified of a violation, and have already signed a lease, you could be on the hook legally to your prospective tenant for breaking the terms of your lease agreement.
While it is almost impossible to plan for every potential rental complication, following these five tips can make managing rental properties easier and less painless for you and your tenants.