In today’s struggling housing market, have you been considering renting your home instead of selling it? That can either be a great decision, or an awful one; it just depends on how you approach the idea. Here is a helpful list of some do’s and don’ts when renting a home.
This is a really interesting topic. Lots of people have decided to try this, but it can be dangerous so here are some tips for those of you who are considering this option.
I’ve been a landlord for 10 years now and I’ve owned as many as 9 properties and I can tell you first-hand that I’ve learned most of my lessons through trial and error; nobody told me these things. That is why I want to share some important tips with others.
#1 Temperament; you’ve got to have the temperament to be a landlord.
You really do need to have the right temperament, and not everybody has the right temperament. You need to consider whether or not you can be “hard” to your tenants. Because if you act compassionate when the rent is late, then the priority of paying the rent just dropped another notch. Ask yourself, “Can I sleep at night knowing that somebody may not be taking care of the home as well as I would?” This is a big factor.
#2 Finding a Good Tenant; it can be tough to find the right renter.
The number one thing to remember while you are in the process of looking for a good tenant is that it’s better for the home to sit empty than it is to get the wrong tenant; because it takes months to get somebody out once they are in there. The main thing is that you don’t jump at the first person who wants to live in your house. Be patient and make sure that you check all the references or you will pay for it later.
#3 References; who should you ask for when gathering references?
I learned the hard way that you don’t just ask the current landlord, you should also ask the prior landlord. If the person is not a good tenant, the current landlord will tell you whatever you want to hear to get rid of those people. Not only that, but you should check with the utility companies because if people do not have a bill in their name with a utility company, they may not be a good candidate for a tenant. The utility companies know how these games are played so you should always ask for utility bills as well. You want to have a track record of how they’ve paid and that they’ve been consistent with their payments.
#4 Neighbors; do you know your neighbors?
I was so fortunate that my neighbors had my contact information one night when somebody moved out at midnight because I wouldn’t have known otherwise. If you don’t know your neighbors, go around and introduce yourself to make sure that they have your contact information. That way they can get a hold of you if they see anything suspicious happening to the house.
#5 Rent; how do you know what to ask for rent?
Rental amounts change a lot and that’s why I go to Craigslist, or something similar to it, to find out what the prevailing rent is for a property like yours; it really varies from week to week, and month to month depending upon supply and demand. The best thing to do in that process is charge a little bit less than what the prevailing rent is; you’ll have a lot more people to pick from.
#6 Leasing Companies; is it better to hire a leasing company or be a landlord yourself?
If you have the margin to pay for a leasing company, by all means do so. They are far more objective and they know how things go when evicting somebody. They are not going to get emotionally attached to the clients like sometimes the temptation is as a landlord; buying into their problems and so forth. So if you have the margin it’s a good idea. Leasing companies typically charge about 10% of the monthly rent. So if you can do that, by all means pay somebody else to take care of it.