PROPERTY RENTING 101
This article provides the basics and everything about the rental process, from A through Z, and how to run a successful, risk-free rental property business for yourself.
Here is a list of 10 STEPS that every homeowner should follow to Rent out their property.
- PUT PROPERTY ON THE MARKET
Once you have decided to rent your home, you must take the proper steps to make sure the right people see it. Decide the cost to Monthly rent and Security Deposit. Do some research about how strong (or weak) the rental market is. Find out if homes are renting very quickly with multiple applications and plenty of phone calls, or if they’re renting slowly, taking several months, with few applications and phone calls, and establish requirements for potential tenants. Advertise your property on the proper outlets — newspaper classifieds, social media, etc.
Tips for Advertising your home for renting.
Post on Websites: Putting your property on the market means posting advertisements for your home on all applicable and relevant websites.
Write a Great Ad: You should write a compelling, attention-grabbing advertisement that highlights the best features of your property and attracts quality tenants.
Take Great Pictures: Finally, take some fantastic, high-quality pictures of the both the interior and exterior of your home and property.
- SHOW THE PROPERTY
Never show the property on your own, and if possible, show the home during daylight hours. Talk on the phone ahead of time, and make sure someone you trust knows when you’ll be showing the property.
Now that you have prepared your home to be marketed and put your property on the market, it’s time to get ready to show your property to interested renters.
Start with the phone calls. Your online listing will have (or should have) included your phone number for contact information, So once you have people calling you about their interest in renting your home, deal with those first, and set up showing times.
Safety, Safety, Safety: Keeping yourself or existing tenant safe is paramount when it comes to showing your home
Here are some tips to help you stay safe when showing your rental property:
- Do some quick research on the person before you meet them?If the person gives you their full name, just do a quick Google search and make sure there is no issues or negative news articles about them.
- Search their phone number.If they won’t give you a name, then do a Google search on their phone number; this will help you find their name, which you can then look up for any suspicious information.
- Let someone know where you’re going to be when showing your property. Tell someone (a family member or close friend, or business associate) where you’re going to be.
- If anything seems “off” beforehand, don’t show the house. Trust your gut. If something feels “off,” if you’re getting a strange vibe, if you feel uncomfortable or unsafe for any reason, then abort the mission..
- Be aware of your surroundings at all times. When you go to the house, be aware of your surroundings and what is going on. Don’t be paranoid; rather, be alert and cautious. Keep yourself safe.
- Make a plan if anything feels “off” during a showing. If you’re inside the home and feel unsafe with the so-called “interested” tenant, then keep yourself safe with a plan.
- Meet at a public place if you feel unsafe or threatened. You can also meet any potential renters at a nearby location. Choose somewhere that’s close to your property, but also public and high-traffic. Then you can assess the individual and the situation before moving forward with a showing..
- Don’t go alone. In some instances, if you’re uncomfortable, it’s best not to be alone when showing the property. Take someone with you—have them pose as your assistant or associate.
- Don’t give out pertinent information about your home. During a showing, while talking to potential renters, don’t give out any important information about the home’s security system.
- TAKE AND PROCESS APPLICATIONS
To safeguard against “bad apple” tenants, perform background checks on all who apply. Put minimum requirements in place, being careful not to violate discrimination policies.
Tips on Weeding out bad apples.
Here’s a list of some red flags to watch out for—red flags that should put you on alert to do more research on the prospective tenant:
Someone Who Wants Your Help With The Deposit: A rental candidate who is requesting for your help with some part of the deposit or requesting some more time to pay some part of it.
Someone who asks about Background checks; Run far away from someone who asks this. They have something they want to hide—something they don’t want you to find out about.
Someone Who’s Late To The Showing: If you’ve arranged to meet at 3 p.m. on Saturday for a showing of your property, and they don’t show up until 3:15, that’s a red flag that this individual might not take their responsibilities seriously.
Someone breaking their lease: If someone is breaking their lease with their current landlord to move into your home, what’s to protect you when they decide they want to break the lease with you?
Someone evasive with your questions: Tenants who are evasive with your questions. Let’s say you ask a candidate if they’ve ever committed a crime. If they seem evasive, try to avoid the question, try to change the subject, etc., then they could be hiding something,.
Someone who hesitates to give you references: If someone is hesitant to give you references, that’s a red flag indicating they don’t want you to talk to their references and learn about their tenancy history.
- APPROVE OR DENY TENANTS
Once all credit and background checks have been run, decide which tenants will be the best fit for your property. Recommendations from previous landlords can help you choose between highly qualified tenants.
Set Up Minimum Qualification Standards
The first step in the screening process involves setting up minimum qualification standards to protect yourself. Suggestions for minimum qualification standards includes
- The minimum deposit you’ll require.
- The minimum credit rating you’ll require.
- Will you allow pets
- Will you allow smokers
- What are the income requirements
- Will you rent your home to extra adults
- How many people will you allow to rent your house at once
- Will you rent your house to people who have filed for bankruptcy
- Will you rent your house to someone who has been through a foreclosure, short sale, or car repossession?
- Will you accept Section 8 tenants?
- Will you accept someone who shows up late to a showing
- Will you accept someone who’s breaking a current lease or has been evicted?
- Will you accept people with a criminal background
- The tenant’s personal appearance. First impressions matter
- Will you require every person over 18 in the house to apply
- PREPARE AND SIGN THE LEASE
If possible, hire a lawyer to draft a rental agreement that protects you against bad tenants and any potential legal disputes.
25 Items Every Lease Should Have
Here is a list of 25 items that every lease should contain:
- Monthly rent due: The first thing you’ll want to detail inside the lease is the monthly rent that’s due.
- Instructions on how the tenant should pay: Have exact instructions on how the tenant should pay you their rent. Check, Online option, Cash etc.
- Rent due date: Include a clause on the exact due date for the rent, every month.
- Late fees and penalties: Specify any late fees or any penalties for unpaid rent or rent paid late to enforce payment
- Security deposit: Explain the amount of security deposit required upfront, before the tenant moves in, and all the rules that go along with it.
- Non-payment of rent: Just as you need to detail late fees and penalties, you also need to spell out what happens if they don’t pay you the rent at all.
- Alterations: Stipulate whether a tenant can make any type of alteration(s) to your home and property.
- Appliances: Don’t forget to stipulate which appliances are included in the property for use by your tenant.
- Smoking : Be very specific about your rules about smoking, or your tenants could easily find loopholes and you could be left with smoking stains, lingering smoke scent, and other damage to deal with before your next tenant can move in. Be as clear as possible.
- Pets:This is another area where you need to be careful, and specific, about your rules. If you don’t allow any pets under any circumstances, then make sure that’s clearly spelled out in your lease.
- Use of premises: Carefully spell out the use of your premises such as Residential and rules around , Fixing cars in the driveway, Subletting (Airbnb).
- Rules for property: You’ll need general and specific rules for your property around cleaning and maintenance, change of locks, late nights, installation of dishes, number of vehicles, fireworks, or firearms and smoking of marijuana if it is legal in the province.
- Renter’s insurance: I suggest the lease require the tenants to have renter’s insurance; that way, they can’t legally sue you if, say, the house burns down, along with all their contents,
- Utilities: Your lease needs to contain a clause about utilities—specifically, what utilities are required to be paid, by whom, and when. Spell out every single utility that the tenant is required to pay.
- Above-ground pools/trampolines: Specify rules for aboveground pools, trampolines, or other hazardous items that could be placed on your property? This helps to cover you from potential liabilities that could happen when someone injures themselves on trampoline, or drowns in a pool on your property.
- Parking and vehicles: Parking and vehicles can create a whole host of issues, so you will need to spend some time with your attorney developing rules. Around Too many vehicles, Non-working vehicles/vehicles on blocks, parking spaces. Your lease needs to include how many parking spaces your tenant will be allowed to use.
- Other adults living on the property: Some tenants will allow friends or family members to “crash” at their place (your place) for an undetermined amount of time. If you don’t want extra people—people you don’t know, haven’t met, haven’t screened, etc.—then you need to protect yourself in your lease.
- Property maintenance standards: Determine your standards for property maintenance and generally take care of your property, and have that clearly detailed in the lease property maintenance for Light Bulbs, Phone and Internet, Drain Stoppage, Ac Filter, Lock-out Charge, Pools and Sprinkler’s systems.
- Condominium Association complaints: You need to have in place clauses that protect you in the event of a Condo association complaint.
- Code enforcement complaints: Just as with Condo complaints, the same applies to code enforcement complaints.
- Pest control: You will also need a clause for pest control. Why, Detail the rules of pest control in your lease to save yourself money and some unnecessary grief.
- Smoke detectors: Next, include a clause for smoke detectors. Ensure the tenant checks the smoke detectors and is satisfied before they move into your home.
- Right to access property: A property owner has the right to access their property on a reasonable basis for inspections and/or repairs, and your lease should reflect this.
- Property disclosures: Don’t forget to include clauses for property disclosures that protect you, particularly for lead-based paint (if your property was built before 1978), radon gas, mold/mildew, and any major property hazards, such as pools and high balconies.
- Your rights in case of abandonment: Finally, your lease should include rules about your rights if the tenant suddenly breaks the lease without notice and abandons your property.
- HANDLE THE TENANT MOVING IN
Choose a lease start and end date, and specify any moving stipulations. Security deposits should be paid to protect against damages.
After a tenant moves out, check the condition of the property to make sure there isn’t any damage. Go to the home, by yourself, and do a walkthrough inspection.
If you find damages or other issues, you need to reimburse yourself out of the tenant’s security deposit or contact the tenant and have them work out some sort of arrangement for paying you to have the property fixed
- COLLECTING THE RENT
Whether you set up an automatic withdrawal or choose to collect rent by mail or in person each month, make sure the tenant is aware of due dates and any potential late fees.
Make sure you get paid, you get paid on time, and you get paid in full. This is the main point of renting out your property—some extra income so you can make a bit of a profit, and/or cover your mortgage payments and expenses associated with owning the property. Don’t forget that some of the money coming in should be saved for repairs to the home and all of the upkeep.
Collecting the rent should be your first priority in ongoing property management. Otherwise, what’s the point?
- HANDLING TENANT ISSUES
Respond to and resolve issues in a timely manner to prevent escalation. Take care of repairs, and know when to involve authorities.
TIPs; Handle Maintenance and Repairs
Ensure the property is well maintained and that any and all repairs are handled. The important thing to remember here is to address and fix property damage issues as quickly as possible.
Further, make sure the property is kept in good shape. Broken windows, broken locks, an electrical or plumbing issue, a problem with an appliance or piece of furniture—address these issues and keep your home in good working order.
- CHECK ON THE PROPERTY
Keeping an eye on your property — without infringing on the privacy of your tenants — can help protect you from major damage and allows you to resolve any potential issues before they arise.
TIPs: Key things to worry about is to keep an eye on when you have Tenant already leaving in your rented property
It is highly recommended that you check on your property regularly while you’re renting it out even to the most seemingly perfect tenant. One benefit of doing this regularly is dealing with the issue early on, to avoid further issues, more damage, more repairs, and less money in your bank account.
Regular property check-ups don’t just apply to property damage issues. Checking up on your property regularly can also help you monitor any unpaid bills, particularly related to utilities. You need to ensure tenants are paying for all utilities—for the sewage, for the electricity, for the heat, for the water, for other basic maintenance, and for emergency repairs, etc., and that they are making sure everything is being handled properly.
- HANDLE THE MOVE OUT
When a lease ends, inspect the property for any major damages and determine whether the security deposit can be returned. If tenants refuse to move out, you may need to involve an attorney or law officials.
Market the property To line up a new tenant
Don’t wait until your current tenant moves out to line up a new tenant. If your tenant’s lease is up and they advise you that they’re moving, start marketing your property to line up with the move-out date.
Prepare for the next tenant: Now it’s time to prepare your property for the next tenant. Clean it thoroughly. Make any upgrades or improvements, as necessary. If there is damage, get it fixed. Any repairs needed, repair them.