My basic guide to protect yourself and your property from unnecessary headaches.
1. The Truth: People don’t like to live in dumps.
The Situation: Inexperienced landlords tend to think that renters will take anything they can get or that they can just fix everything after someone moves in and complains. What most landlords fail to realize is that their home is not the only option. Renters are out there seeing 5 homes or more each day. If your home isn’t the best, or at least in good condition, renters will pass on your home. If they see lots of repairs that need to be made, they will rightfully believe that you wouldn’t maintain the home properly after they move in as well. That scares people. Scaring renters is expensive, both in time and money.
Power Tip: Just fix it. If it’s broken, please fix it or get rid of it. No one wants to live in something that’s falling apart. You’ll attract more renters to see the home, feel safe in it, and fall in love with it. This translates to someone moving in earlier by a few weeks or even months. If your home is really messed up, it may never get rented out. Don’t save pennies just to lose dollars.
2. The Truth: Having the help of thousands of agents can bring more qualified interested people than just your single Craigslist ad.
The Situation: The more views you get, the faster you get it rented out. You want to utilize the power of all the agents in the area fighting to rent out your home for you first. Sure, you can eventually get it rented out if you do everything yourself. It might take a lot longer to find a good renter though.
Power Tip: Use an agent to promote your home via the MLS (multiple listing service). This allows the home to be on the market for every real estate agent to show. You can still control who sees your home. But you will get much more eyes on the home, more applications, and a better pool of applicants to screen and choose from. It may cost a few hundred dollars to hire agents and pay commissions, but it would come out of the first month’s rent and not directly from your pocket. That first month’s rent will also come much sooner and from a more qualified reliable renter on average. Often well worth it. If this is your first time renting to someone, a competent agent would also help you navigate the ins and outs of leases and protecting yourself.
3. The Truth: If you believe there’s only one option, you’ll take it.
The Situation: Many first time landlords tend to rent to friends of friends, or the first person that calls them that has a decent job. The new landlord may not know how to do a credit check, background check, or check that applicant’s rental history. They may think that no one else will come along, so they’ll think, “Let’s just try and make it work with this person.” How bad could it be? This sets up landlords for allowing strangers to live in their homes without making sure they’re the best option out there or even trustworthy. Without running background checks, credit checks, or rental history, you wouldn’t know if they can even make the rent, or if they’ll deal drugs in the home, or if they’ll keep your home in good condition. There are more options out there, but not if you’ll just accept the first warm body that comes along.
Power Tip: Screen your applicants and don’t compromise. Run a credit check and background check. Verify their income and rental history. If they look risky, they probably are. Usually medical bills are okay. But oftentimes unless there’s a really good explanation, car repossessions, evictions, non-payment of rent, and collections from property managers or utility companies are bad signs. It may not seem like that much of a risk to rent your home out to someone without checking them, but you don’t want to be stuck cleaning up after someone who trashes your home, doesn’t pay rent, or performs illegal activity in it. Don’t accept an applicant just because they’re the first warm body to come along.
4. The Truth: Mixing business and friendships is dangerous.
The Situation: Many people mistakenly think that if a friend is their agent or tenant, that things will go more smoothly. The truth is that we tend to be too lenient on friends who are tenants, and can get taken advantage of when they don’t pay rent on time or violate boundaries or rules. When your friend is your agent, it’s hard to fire them if they’re not as competent or attentive as they should be. In both cases, emotions stop you from enforcing good boundaries.
Power Tip: Do business with qualified people. Whoever your tenant is, check their credentials. You never know what people are hiding. Whoever your agent is, make sure they have a good track record. Shop agents and ask for a track record of home rentals they’ve done. Ask them about the process. The experienced competent agent will make you feel safe. The friend who just got their license will not.
5. The Truth: Your pets are nice. Other people’s pets are a liability.
The Situation: Sometimes in the process of renting out your home to pet owners, you overlook some key facts. Dogs and cats that are well-trained are usually fine and don’t cause damage to a home. But it’s hard to tell without that being your pet. If you are open to renting to pets, please be aware of the risks.
Power Tip: Only consider pets with caution. Although avoiding other people’s pets in your home is ideal for minimizing risk of damage to your home, here are some pointers if you want to consider renting to pet owners.
- Always charge a pet deposit.The renter would be refunded that amount minus any necessary repairs related to the cat or dog’s actions in the home. When there’s a cat or dog involved in renting, you should always ask for a pet deposit if it’s a pet you don’t personally know and trust to take good care of your home. The average deposit is from $300 to $500 per pet.
- Make sure you know if the pets are spayed or neutered. It would be an additional liability if there was the possibility of more popping up.
- One extra tip: Cat urine odor is incredibly difficult to remove without ripping out the carpet. If you have tile, maybe not so bad.
6. The Truth: This should go without saying, but just in case: Discrimination is not okay.
The Situation: Many landlords think that because it’s their home, they can choose whoever they like based on whatever criteria is good for them. You can disqualify tenants based on rental history, credit history, background, income situation, pets, and many other reasonable criteria. But there are a few things you need to know before you become a landlord.
Power Tip: Be aware of fair housing laws. It’s illegal to discriminate based on race, color, religion, sex, sexual orientation, familial status, or national origin. For more information on fair housing laws and pitfalls to avoid in being a landlord, please visit the link below:
I hope this article has helped inform you on some key items to pay attention to when you decide to rent out your home and be a landlord.
If you have any questions or would like some assistance in real estate, please feel free to call me anytime at 702-343-2670 or send me an e-mail to lengsellsrealestate.com. Cheers!