Owning a home isn’t right for everyone, which is why many people invest in rental properties. This week I’m sharing my thoughts on how to prepare a home to be rented, and what it means to be a good landlord.
To prepare a home for rent, consider these six suggestions:
- Really clean your house. As mentioned in a previous column, we all know that other people’s dirt is dirtier than our dirt, so make sure your place is CLEAN. We’re talking about a “mother-in-law visit” clean, not the old “dust and vacuum” clean. Have carpets and window treatments professionally cleaned.
- Make sure the home is in good repair. Fix leaks. Replace broken parts. Deferring maintenance can actually cost you money. The additional problems from an unfixed leak can get very expensive.
- Put in attractive, hardy, low maintenance landscaping that’s appropriate for the property. A dirt patch is hardy and low maintenance, but hardly attractive or appropriate for most properties. A field of delicate flowers is beautiful, but not hardy or low maintenance.
- Make sure all door and window locks are in good repair, and re-key locks between tenants. Paying $50 to re-key locks is a small price to pay for the peace of mind that you’ve protected your new tenants from someone who might have an old key to the property. Hope for the best, but plan for the worst.
- Take pictures of your property. Good pictures make for good marketing. They also serve as a record of the condition of your property before it was rented to the current resident. Some memories are faulty. It’s always nice to have proof.
- Consider who would be happy living in the property in its current condition. If the house is in good shape, then responsible renters will likely be interested in renting from you. If the house isn’t in good shape, consider maintenance that would make a nice difference and attract the type of applicants you’re looking for.
So, the house is ready to rent. If you’re a new landlord (even if you’re not), how can you be a good one? Being a good landlord includes following these six rules:
- Start with a thorough application. Ask about income, credit, rental history, and other relevant details. Once the applicant provides this information, VERIFY it. As a long time property manager, I have seen some interesting attempts at deception.
On rental history, for example, if a tenant isn’t paying in a timely manner or is a complainer or isn’t taking care of the property, the current landlord might be motivated to give that tenant a sparkling recommendation. Why? Because if someone else will rent to the tenant, that tenant will vacate their current property. That’s the reason you should talk to the last two landlords.
On employment verification, even if you call and get “ABC Company” and a stellar recommendation, consider further research if you’re unfamiliar with the company. Call back in a few days and see if “ABC Company” answers or if “Joe” (the brother-in-law) answers.
Run a credit check and then read it. If you don’t know how to interpret it, ask someone who does.
- Use a well-written rental agreement. Make sure you leave no doubt about who is responsible for what. Include more than just the financial details (security deposit, monthly rent, length of the lease). Be clear about who pays for utilities. Are you pruning the roses or is the tenant expected to do so? How many people can live in the home? Are pets okay? Do you have a pool or hot tub? Is it mentioned in the agreement? If you Google “residential rental agreement,” you’ll find lots of sample rental agreements. Review them to find an agreement that’s right for you.
On the utilities issue, you should require the tenant to show proof that they’ve put the utilities in their name as soon as they occupy the property. Trying to get back payments is a hassle that can and should be avoided.
- Rely on a Move-in Checklist. A checklist protects you and the new tenant. The tenant has the opportunity to note any deficiencies (e.g., whether a window was cracked when they moved in to avoid being charged for it later), while a landlord can later refer to a signed checklist that indicates the tenant didn’t see anything amiss when they took occupancy.
- Install carbon monoxide and smoke alarms, and brace the water heater before you rent the property. Protect your investment and your tenant with these inexpensive and legally required safety precautions.
- Maintain the property. Be sure to keep on top of regular maintenance. Don’t wait for a change in tenants to keep everything in good working order.
- Be responsive. Being responsive doesn’t mean giving in on every issue or being at a tenant’s beck and call. It means responding appropriately when your tenant requests information or repairs.
This blog wouldn’t be complete if I didn’t mention how much to charge, and yet, there’s no easy formula. I will say that I charge a security deposit and first month’s rent. Why don’t I charge first and last month’s rent? Because, the rent can only be used for rent and no other reason. Be aware that the security deposit cannot be more than twice the monthly rent for an unfurnished property. If you’re not sure what to charge, do a little market research; find out what are other properties in the area renting for.