You can spread the word among friends and colleagues, create a post on local social media pages, run an ad in the paper (both print and online).
Be sure to have an application process set up for potential tenants. Ask for their name, employer, salary, previous landlords and some references. You will need their Social Security number and authorization to check their credit and criminal history. In the case that you hire an online agency for the background checks, be sure that they are accredited by the Better Business Bureau.
Ask potential tenants to fill out an application form, listing their basic information: name, employer, salary, previous landlords and references. You'll also need their Social Security number and signed authorization to check credit reports and criminal history. If you hire an online agency to provide background checks, make sure it is accredited by the Better Business Bureau.
2) Determining Rent
Do your research! Check out rent amounts of other properties in the area. Be realistic about the amount you will be charging! You must be comparable to what is also in the market.
3) The Lease
You need to protect yourself and you can do so with a lease!
"Have a written lease so that each party understands their rights and obligations."
— Dianne Coscarelli, American Bar Association
A good lease includes:
- Lease Term: Month-to-Month offers more flexibility; However, an annual lease offers stability.
- Security Deposit: Typically one month's rent
- Rent Due Date & Penalities
- Routine Upkeep & Maintenance Responsibilities (i.e. lawn care)
- List of Tenants
- Repairs Responsibility
- Pet Policies (deposits, animal limitations, addition to rent, etc)
- Rules of Behavior (Noise, neighborly conduct, smoking, etc)
- Homeowner Association Dues & Who Pays Them, if applicable
- Association Rules to be Followed
- If home is on the market, Arrangements for Showings
- Eviction Terms (i.e. not paying rent, damage to property, not adhering to lease terms)
4) Property Insurance
"Protecting your property with the correct insurance policy is extremely important. You need a different policy if you're renting a property to a tenant versus using it as your primary residence," says Villa. "While you were living in the house, your insurance was a homeowner's policy, which covered the structure, damages and your belongings in the house. As a landlord, you'll need rental home insurance, also known as fire insurance." This policy covers your home's structure, legal costs, medical expenses and loss of rental income, if repairs are needed. Since you are not responsible for the tenant's belongings, you should encourage tenants to buy renters insurance.
5) Hire a Management Company
Fees are charged primarily for two services: finding a tenant, which includes advertising and background checks, and managing the property. The fee for filling a house can range from 50% to 150% of one month's rent, depending on the area. Monthly management includes collecting the rent, charging late fees, handling repairs and dealing with early vacancies and evictions.
If you hire a property manager, find a licensed professional, urges Candice Estey Swanson with the National Association of Residential Property Managers (NARPM). To locate a manager in your area, go to NARPM's website and type in your ZIP code. Your real estate agent also may offer property management.
One big advantage of using property managers is emotional distance. "Often the owner will get involved with the tenant emotionally," says Swanson. "Even though (property managers) take good care of tenants and they're sympathetic, their job is to make sure that owners get the rent."
6) Prepare Properly for Evictions
You'll need an attorney to evict a tenant. "If the tenant doesn't leave willingly, you can't just go and move their personal property and kick them out," says Coscarelli. "You have to go to court, and the sheriff needs to come out and physically remove the person if they don't move out willingly."
How much is an eviction? Legal fees alone can range from $300 to $1,000, says Coscarelli. But when all other costs are added, "You could end up spending easily a month's rent," she says.