Property is an amazing asset, and you can easily turn it into a source of passive income. Renting to someone else will require very little work once they are actually in – then all you need to worry about is preparing the home and finding a new tenant when they move on. Take these six important steps to ensure that your home, and you, are ready.
1. Check local regulations
What are the guidelines for your local area? Do you need to have a license to become a landlord? Is it necessary to change your insurance? Do you have to pay extra taxes once you rent out your home? Do some thorough research to ensure that you stay on the right side of the law. The last thing that you want is to be stuck with a fine, or find out that you can’t be a landlord at all when you’re already deep into the process.
2. Consider local prices
What’s the usual rental price for a home of your size in your area? Take a look at the boards and sites that other people will use when looking for a property for rent. This way, you’ll get an idea of what you can charge per month. You can hit the average if you just want to see how it goes, price above the market average if you want more profit with less urgency, and price below the market average if you just want to get some tenants as fast as possible.
3. Fix up your property
Now it’s time to make sure that your home looks appealing to potential renters. It’s time to fix anything that might be broken, do a thorough clean, and consider replacing anything which doesn’t have good aesthetics. The aim here is to keep it simple and not to spend too much money. After all, if you improve the home too much, you’ll have to raise your rent in order to make the money back, and you may struggle to find a tenant.
4. Brush up your skills
As a landlord, you may also be called upon for some DIY tasks. You could hire a local handyman to take care of things whenever your tenants have a problem, or you may wish to do it yourself to save money. What are the common factors that could cause a washing machine to break down? How do you replace a lock? What do you do if appliances get flooded and carpets need drying out? Consider learning some basic plumbing, electrician, mechanic, and decorating skills.
5. Work out your contracts
It’s a good idea to consult with a lawyer or property management company on your lease contracts. Make sure that they are watertight and cover all of the clauses you want them to. You should also consider whether bills will be included in the rental cost or your tenants should pay themselves, how long the lease will last for, and how much of a deposit you want upfront.
6. Get help
Finally, if you don’t want to handle absolutely everything yourself, bring in some help. There are property management companies that will do everything for you including collecting rent and finding new tenants. You can have as much or as little involvement as you like. This will reduce your earnings, but also give you more freedom and allow you to put in less work.
Once you’re ready, it’s time to put your home on the market and wait for rental applications to roll in. Good luck on finding your first tenants!