Owning and renting out a house in the USA does appears to be a great investment opportunity and a perennial source of income. However, being a Landlord has its own advantages and liabilities. We bring you a list of things you should remember before renting out your house in the USA.
Familiarize yourself with Renting Laws
The Law provides certain rights to the person who is renting a house, in order to protect them. Thus, it is imperative that you should have an understanding of what a tenant is entitled to and also what are your own rights as a landlord. Be aware of the state and local laws relating to landlord and tenants.
One way is to reach out to your local housing authority to learn the regulations you have to adhere to. Knowing the law will help you immensely in deciding crucial things such as security deposits, eviction process, etc. The importance of knowing the law cannot be stressed enough, given there are even rules on what questions you can ask your prospective tenant!
Having gained a sound understanding of the legal framework, it’s time to move on.
Prepare your property
Before you actually go about showing your house to prospective tenants, it is best to make sure that it is presentable. One of the cardinal mistakes that a house owner can commit is, assuming that the house will be always rented.
This may be true during prosperous times. However, during a downturn, many properties become vacant and offer a choice to the renting community. With a lot more to choose from, the tenants are much more demanding and it pays to take the time and effort to make your house appealing enough to attract the right tenant.
- Carry out Repairs: Before you start beautification, you should first carry out all major and minor repairs to ensure everything is working properly. Go through the house from a tenants’ perspective and inspect everything. Are the fittings secure? Are all the appliances in working condition? Any plumbing leaks? Fix them. Keeping a checklist of what the tenants expect will come in handy to make your house that much more desirable. Of course, you can carry out the repairs yourself using DIY videos or you can hire professional to take care of the chores. Do check out kuchkuch for listings of handymen in your area.
- Clean and renovate the house: You will agree a well-kept house is much more appealing and create a better first impression. So, make sure it is perfectly clean and presentable. Painting the house and having a few modifications to make it more appealing is also recommended. You may want to check out kuchkuch.com for painting services in your locality.
Determine the Rent for your house
Now that the house is ready to be rented-out, you have to decide on the rent. You many have a mortgage on the house and you will be expecting the rent to cover the mortgage and give you an additional profit on top of that. However, you have to be realistic in fixing the rent to ensure that it is competitive to attract the right tenant.
To set the right rent amount do some research. Check newspaper ads, online listings, neighborhood signs and talking with friends. Do take the time to visit other houses that are being offered for rent and compare it with what you have to offer.
Market your House
Having determined the rent, you want to generate; you have to reach out to the tenants. Advertise your house. List it on sites such as kuchkuch.com to get noticed by people looking for rental properties. Highlight the top features of your house. Take the time to write a good listing using the terms that will appeal to the prospective tenant. At the same time, be very specific in what you are offering. Use your social media accounts effectively to reach people looking for housing. The more you reach out, the better is the prospect of getting the right tenant.
Screen the tenants
Once you have put out the listings you will be getting enquiries soon enough. The next step is to screen the tenants. Ask them for details such as name, employment, previous landlord, income, and references. While screening a tenant their ability to pay the rent is not the only quality to look for. Getting to know some personal information might also come in handy in determining how well they will care for your house.
It is a good idea to do some background checking about the person looking to take up tenancy. You may check online resources for criminal records, and check out their credit ratings (be sure to take their consent before doing so.) Contact employers and former landlords and references to check on the claims of the tenants.
Hate to do the checking yourself? You can choose to employ an agency to do the background checking on your behalf.
Note: Fair Housing Laws prohibit asking questions relating to issues such as race, familial situation and so on. So be sure to avoid these questions or you may invite needless legal action.
Draw a Lease
Drawing a lease agreement is a very vital step in renting out your house. Whatever you and the tenant have agreed to, has to be put in writing. You may find sample lease agreements on the internet. However, all the terms may not be applicable to your State. Ensure the agreement you are drawing is valid. It is a very good idea to get the lease agreement drawn up by a legal expert. This will ensure that the document you sign with your tenant is legally valid.
Your lease agreement is the base document on which any future dispute will be resolved. So, take the extra effort to put in everything in the agreement. Here are some of the aspects that should be in the lease
The List of tenants: Yes, you are entering into an agreement with one person, but it is important to include in the lease everyone who will be residing in the house. If you include only one person in the lease agreement, it will not bind the others in the household. So, include everyone in the lease.
The lease term: Is it a short-term lease? What are the conditions for renewal?
Rent Due Day: When is the rent payable? Will there be a penalty for missing the due date?
Security Deposit: Are you going to get a security deposit from the tenant? Usually, a month’s rent is collected as security deposit. But it can be more depending on mutual consent. It is better to make a provision to repay the deposit when the tenant vacates the property.
Repairs and Maintenance: Who will be responsible for repairs in the house? Will the tenant bear it or will you pay the bill? Who will take up routine maintenance such as mowing the lawn? It can be either but have it spelled in the lease agreement.
Rules of Conduct: Set out the rules for tenants such as noise levels, smoking, relationship with neighbors, and more.
Restrictions: Your lease agreement can include any restrictions you wish to place on the tenant. These could include restrictions on owning pets, rules enforced by housing associations.
Causes for Eviction: What are the terms and modalities for eviction of the tenant in case they violate any of the terms in the lease agreement? It is important to have them listed out clearly as any court will rely on the written document in case of disputes.
These are just some of the main clauses to be included in a lease agreement. You can of course include more in order to avoid any confusion in the future.
Get a Landlord Insurance
A landlord insurance policy is different from a home owner’s insurance. It offers protection against damage caused by tenants and also against lawsuits. It will also cover any loss of rental income. However, you will not be responsible for the belongings of the tenant and must encourage them to take cover for their belongings. This can be specified in the lease agreement.
Consider employing Property management firm
If you are someone who finds it difficult to follow the nitty gritty of being a landlord, you can always employ a property management firm. These firms will take care of your property including maintenance and repairs and often find tenants in case the current one leaves prematurely.
These are some of the things you need to keep in mind before renting out your house in the USA. Begin your journey on becoming a successful landlord with a listing at kuchkuch.com. We wish you success in your endeavors.