Hats off to you for deciding to rent out a home! You’re making the transition from being a homeowner to a home giver by providing your property to a prospective renter. With the right renter, renting a property can be a fulfilling partnership for both parties. And with rent prices on the rise, this might be an especially advantageous moment.
Remember: Your approach to being a landlord has a lasting impact on a renter’s life. Finding the right location for your investment and your surrounding competition will help you prepare for your future renter. Making sure that your amenities and home improvements are up to date will make your home more attractive to renters on the search.
All told, here is our manifesto on all things related to renting your first property.
In order to successfully rent your first property, you will need to understand the fundamental rules of renting before listing your property as available:
Learn the laws around rental agreements on a federal level and a state level.
Financially prepare to fill a vacancy longer than initially expected – you might not always be able to fill a vacancy within a month, so plan to potentially lose several months rent if it takes awhile to acquire a new renter.
Know what maintenance responsibilities you can and can’t assume and allow room in your budget to hire help for maintenance requests that fall beyond your capabilities.
Identify a resource who has an intricate knowledge of housing laws in your state or has experience as a property owner, who you can turn to for guidance.
Know when to make tough decisions such as eviction, turning down potential renters, and how much time, energy, and money you want to spend on advertising a vacancy.
If you’re renting a house for the first time, you might not know that it takes more than handing over the keys to your renter and collecting rent payments. We’re here to help you understand the ins and outs of renting out a home, including first and foremost how to understand your legal obligations as a property manager.
In the United States, renters have a right to fair housing. You should begin by familiarizing yourself with discriminatory housing practices. You don’t want to wait until moving day to learn that you’re violating a law, so it is always wise to do your homework way in advance. You may also consider consulting a housing lawyer if you find yourself getting confused on your state and federal laws.
Once your home is updated and ready to list, it’s important to understand what you’re going to be responsible for when renting out and maintaining renters, from leasing signing to move-out. While some property owners are more hands-on and get into the nitty gritty with home repairs and maintenance, there are a few essential administrative duties that you are responsible for:
Vetting potential renters: conducting background checks and learning a potential renters criminal history, credit checks, and accessing past credit reports.
Drafting comprehensive lease agreements for long-term and short-term rentals.
Collecting and keeping track of security deposits, renters insurance, application fees, pet deposits, or any other renter fees you’ll be collecting. Security deposits are typically kept in escrow accounts, and you can offer Rhino as an amenity so that renters can save money up front when providing a security deposit.
As a new real estate investor and landlord, you will need to know how much your property is worth, and you may have to conduct a few home repairs – fixing broken windows, replacing a dingy carpet, installing adequate security equipment – in order to ensure that long-term tenancy is financially beneficial. If your rental property requires expensive monthly or yearly maintenance, this could ultimately lead to a loss of rental income, or worse, a reason for your current renters to try and find another property.
Start this process by making sure that your rental home is up to date with basic codes according to state and federal guidelines. This is just as important as assessing your property’s viability in the market. Keeping your property up to code – and as a presentable, livable space – is a must before you can even consider potential renters.
Common things to check on, repair, install, or update in your rental home include:
Appliances – refrigerator, oven, dishwasher
Flooring – especially if there’s warped/dangerous wood or cracked tile
Water leaks in ceiling, walls, and floors
Any signs of pests or termites (e.g. wood damage, animal droppings)
Before you dive headfirst into the world of property management, ask yourself whether there is a demand for a rental property in your area.
Get to know your location. Even if you have lived in the same city as your rental property your entire life, have you considered the pros and cons of your location from a renter’s perspective? Geographically specific things to consider: whether your property is close to a university and you can rent to college students, if your property is in an up and coming neighborhood, how much security is needed if your property is located on a busy street or near a neighborhood with a lot of crime. Once you fully understand where your property is located, you can address the implications (e.g. install security cameras).
Identify your competition. Take a look at the price range for properties near you. Does it seem like houses in your area are listed one minute and gone the next, or are things moving at a slower pace? Also, take note of what amenities the other properties are offering. If all of the nearby units are offering free wifi to prospective renters, you might want to consider following suit.
Recognize any real estate trends. The real estate market is driven largely by location, but it’s also driven by timing. Sometimes the property is right, but the timing is a little off, and that’s okay! Remember, real estate trends are called trends for a reason. There are instances, for a variety of factors that are largely out of your control, wherein market trends fluctuate in or out of your favor. After all, being a property owner is an investment, and as an investor, you need to gauge how volatile the market is at a given time.
Connect with other landlords. While there’s no guarantee that other landlords will be willing to reveal their business models, it can’t hurt to connect with your fellow nearby property managers. Even one or two conversations can yield crucial insider information that you can’t capture from comparing listings. For example – a veteran landlord might have private intel on increasingly long durations to fill vacancies, or sit on a community board that is about to approve a local law for the benefit of property owners.
If renting is not your only source of income, it can be difficult to balance another job with the responsibilities of owning and maintaining a rental property - especially when you’re just starting out. You may want to consider approaching an existing property management company in your area to take off some of the pressure. For a small fee, a professional management company will generally provide the following:
Advertising for the investment property
Scouting prospective renters with background checks and similar searches
Collection of monthly rent, late fees, and security deposits
Help handling repairs and evictions
For a first-time property owner and manager, learning the lay of the land can be a lot to take in. From the day you post your first property listing to your renter’s first move-in day, we’re here for you. Let us help you offer a unique amenity to your renters, and get in touch with one of our experts today.