Renting rites
Tips for renting out a property

Renting out a property can seem like a smart business option for a property owner given that he can offset the mortgage, property maintenance and other costs by the rental income and make sure the property remained in a good condition. Yet most property owners remain wary about turning landlords fearing litigation in the event of a conflict with tenants and often decide to keep their properties unused or sell them off. They also have concerns with respect to tenant behavior, possibility of the property being misused, default in payment of utility bills, among others. However, if he chooses a tenant(s) well, a landlord can end up with a source of regular monthly income till the time he decides to sell the property.

Here are some tips for property owners thinking of renting out a property:

Understand the rental market Before deciding to become a landlord, one must do a thorough rental market research. Alternatively, hire a good real estate agent who can fix a realistic rental for the property, educate you about rental laws and help find a good tenant. One must, however, be patient as finding a good tenant could take time; until that happens, be prepared to shell out mortgage payments and other maintenance costs.

Be prepared to bear costs of maintaining a property Maintaining a property can be a costly and cumbersome affair. Aside from mortgage payments, other costs that a landlord would have to bear include property taxes, homeowners insurance, homeowners’ association fees, maintenance and repair costs. Add to that the additional expense of hiring a property manager, in case your property is in some other city or state.

A prospective landlord must also factor in expenses of engaging an attorney to handle legal matters, and administrative costs of interviewing potential tenants, checking their credit histories and references. He may also need to pay a retainer to the tax expert who has to be consulted to understand tax liability and costs that are tax-deductible.

Fix a competitive rental It is imperative to fix a rent price that is in keeping with the market rates. This would require consultation with good property agents, and scanning property ads both on the Internet and in newspapers. You should also check the rentals of other properties in the area to determine a realistic rate for yours.

Screen the tenant well This perhaps is the most challenging part about renting out a property. Doing a thorough background and credit check of a potential tenant is absolutely important to avoid legal complications later. Your rental application must seek all personal details and rental and credit history of potential tenants. It also should seek solid references which you must check before deciding to take on the tenant.

Get a lowdown on rental laws Before renting out a property it’s important to know your rights as a landlord to head off a legal challenge from a tenant in future. You must also have set criteria for all tenants to gauge their personal and financial history. Also, consult an attorney to understand your obligations as a landlord so that you don’t find yourself at the wrong end of the law at any point.

Switch your insurance policy If you have decided to rent out your property, you must switch from homeowners’ insurance policy to rental-home insurance policy. The latter costs less, as it would just cover the building and not its possessions. The tenants, however, could take a renter’s insurance to cover their liability and belongings.

Consult a tax consultant A tax consultant would guide you as to how to deduct mortgage interest, insurance premiums, depreciation, and repair costs among other expenses from your income while filing your returns. Also, he could advise you on how to claim tax-free profit on the sale of your property at a later date.

Tips for renting a property

Scan property ads The first step is to scour for properties on rent on the Internet and in newspapers. You can then select some good real estate portals and get registered with them. Once you have submitted your requirements and budget, the portals would get in touch with you with properties matching your needs.

Consult a good real estate agentWhile scanning property ads in the media is a good way to start, for more specific requirements you must engage a good real estate agent. The agent will be able to find a good property for you in your budget and preferred area. He would even give you multiple rental options to choose from.

Advertise your rental requirementsIf you have an immediate requirement, you could place advertisements with your list of requirements and budget on a good online property portal and newspapers. Alternatively, you could put up notices at bookshops and cafés with your contact details and rental requirements to speed up your search.

Ask aroundSometimes it is easier to ask family and friends about any property on rent matching your requirements. The upside of getting tips from such sources is that they are normally reliable and would require less amount of investigation.

Inspect the propertyOnce you have zeroed in on a few properties, inspect them and find out for yourself if they meet your requirements. Don’t trust anyone else’s judgment while renting a property. Also, while inspecting the property you must check its size, condition, facilities, location, access to public transport and security arrangement before deciding to rent it.

Switch your insurance policy If you have decided to rent out your property, you must switch from homeowners’ insurance policy to rental-home insurance policy. The latter costs less, as it would just cover the building and not its possessions. The tenants, however, could take a renter’s insurance to cover their liability and belongings.