Renting out your property might seem to be a simple task, it is not one the riskiest one. Apparently, it might seem that it involves purchasing a house, renovating it and then using it to earn money through rent. But, without proper knowledge and experience there is a high chance of getting into trouble when being a landlord. A little carelessness can cause you not only loss of money, but also your time and energy. We are not telling you not to rent out your house. We are just advising you to take the following precautions when letting your house or other type of unit on rent.
1. Rental agreement or lease.
Do not take this document lightly. It is legal proof stating all the details related to the mutual understanding regarding your property. It contains the names of both parties, the details of the property on rent, the amount of rent and date it is due, and other important clauses. Iin short, it legally certifies that you are renting or leasing your property. In effect, it allows you to knock on the door of the law in case of any trouble. In case you do not have a rental agreement you will not have any back-up stating the fact that you have rented your property and in dire scenarios, it might also cost you your property.
- Background verification of the tenant
While you might be very keen on earning money from your property, you should ensure that you have a thorough check of the tenant’s background before renting it out. Get his background verified by third parties, check his creditworthiness, and take feedback from his previous landlords. This will speak volumes about the tenants’ nature and whether it is safe to lease your property to him. Even if the tenant is in a hurry and is ready to pay you extra or the deposit immediately, it is our responsibility to take time and do proper verification before concluding on the right tenant.
- Relying on rent solely
While you can earn a good sum of money from rent, you should not purchase a property depending on it. There might be months when you will not find any tenant, and if you have taken out a house loan, it will be a burden during those months. So, do a proper calculation of your income and expenditure before taking any financial decision. Rent is a good source of secondary income, but ideally, it shouldn’t be the primary source of income based on which you pay your critical bills.
4. Recurring cost of maintaining the property
Do not take maintenance issues casually. First and foremost you must come to a mutual agreement with your tenant regarding who will bear the recurring cost of maintenance and what share of it. Often landlords tend to ignore it as it seems to be a meager cost, but remember it is recurring and can cost dearly.
Also, be sure you take care of damages immediately as small damage left unattended will aggravate and become a big expense in the future.
Lastly, if you plan properly for your property’s maintenance, you will be able to rent it out on a regular basis, as a well-maintained property is always preferred over a dilapidated one.
5. Knowing the laws of the state
Each state has housing laws, and you must be sure you adhere to them. In case you are not aware of the laws and do something wrong, you might end up yourself into trouble or bear a heavy financial burden.
According to the Fair Housing Act, you cannot discriminate between your tenants based on gender, color, creed, origin, religion, or disability. In fact, you should also think before asking intriguing questions. While you need to know about your tenant, you should not be interfering in their personal lives and also you cannot be biased toward their choices as long as they are legal.
A dispute between landlord and tenants is a very common thing, and it can happen because of various factors. If you can settle the matter peacefully, it is good for both the parties or you can opt to hire a law firm like Express Evictions, which can help you to get a tenant evicted quickly and legally. They can reduce the hassle and help you to secure your property at minimal costs.