If you’re wondering how to rent a house that turns a profit, the answer is with good planning. Most landlords only expect a few hundred dollars each month so you’ll want to learn some tips and tricks to maximize your investment. It’s important to ensure that the time and effort required to be a landlord is worth it in your local housing market. Consider the following expenses:
- Mortgage payment (if any)
- Property taxes
- Regular maintenance
- Repairs and upgrades
Set a rental rate
Of course, you’ll want your rental rate to be higher than your expenses, but you’ll have to be competitive to attract tenants, too. Research area rents. Tour properties to compare housing quality and amenities.
Have a property management plan
Who do you want your future renters to call in the middle of the night when a pipe is leaking? Make a plan for who will manage the property day-to-day, from fielding maintenance calls to checking on the rental property. You could contract with a property management company or individual to handle all of it, but doing it yourself will maximize your investment.
Set rental policies and write a lease
You can find a basic lease contract online, but there may be issues specific to your situation that are important to include. Plus, you have some decisions to make about your rental policies: will you allow pets and want to include a pet deposit, or determine who will do the lawn care?
You’ll want to make sure the lease agreement is fully legal and doesn’t have any loopholes you haven’t thought of. Consult with a lawyer to make sure you have everything covered!
Create a marketing plan to rent your house
To attract the right tenants, you’ll need some amenities that they want. Take a good look at your home and take note of what makes it stand out. Does it have appliances like washers and dryers? Or are the floors hardwood? You may need to consider some minor fix and flip projects in your home in order to maximize the rental property.
Listing your rental home on an online marketplace like Trulia will help you reach the broadest selection of potential renters and convey all the details about your home in one place.
Meet and screen potential tenants
Usually, the first thing an interested renter will want to do is to see the home. This is a great opportunity for landlords, too. You’ll get to meet each one and get a feel for whether or not they’ll be a responsible, respectful tenant.
Once you have your contenders narrowed down, it’s smart to get an application from them and run a background and credit check. You can use an online tenant-screening service, or do it yourself.
Document your rental and protect their security deposit
This is a small but important step once you’ve decided on a tenant. You will legally owe your renter their security deposit refund at the end of the lease, so put it in a separate account where it’s safe (some states even require this by law). You may spend some of it on repairs, but you’ll still need it available immediately. You’ll have a legally-determined deadline (it varies by state, but often 30 days) to make those repairs and provide documentation of how the money was spent.
Make sure you take photos of the condition of your rental home before the tenant moves in. When the lease is over, you’ll want to be able to prove that any damage done to the place did not exist before.
If you’ve decided to rent out your home, then it’s safe to assume that you will deal with a wealth of new challenges but also have an opportunity to realize financial upside. Now you can start growing your portfolio! First Equity Funding is a privately funded, asset-based real estate lender offering Fix & Flip, Rental (DSCR), and New Construction loan programs in over 40 states throughout the US. Contact us to get started with your new real estate investment project at (732) 359-7800