Why would people want to rent out their homes? It might be to get some extra income or repay a debt or even as an option to tide over a housing slump before selling the house. Whatever may be the reason, it is always advisable to go about it in a methodical manner especially if you are aspiring to be a first time landlord.
Here are a few tips to follow if you are planning to rent out your home.
- Know the responsibility involved – While getting all the benefits from renting out your home, you should also be prepared to shoulder the numerous responsibilities that come with it. Be equipped to face problems and issues that you never thought could crop up. You have to collect rent, take care of repair and maintenance work, keep an eye on the housekeeping skills of your tenant to reduce wear and tear on your property and pay more for your home insurance policy. Only if you feel that you can take care of these responsibilities or hire someone to monitor these activities should you decide to rent out your property.
- Prepare your home – Tenants can be quite choosy about small things because the market for rental homes is quite competitive. Have your home thoroughly cleaned by professionals and ensure that all the appliances are in good working condition. If you are renting out a portion of your home only, make sure that it is secured with a separate entrance. Once these things have been sorted out, it is time to make the house visually attractive. Contact local tradesmen to spruce up your home. For example get in touch with plastering services in Melbourne if your house is in the city or suburbs to smoothen out the walls and apply a fresh coat of paint if required. The next step is to advertise for tenants on reputed websites or in newspapers.
- Hire experts for statutory compliances – You will have to hire professionals to guide you through the maze of laws governing rental property. Tax laws stipulate that rental income has to be included in returns. There are tax deductions you can claim but you should know which ones are relevant for you and the annual limits for claiming deductions. A tax lawyer can guide you in this regard. Similarly, you should consult a property lawyer for guidance on landlord-tenant contracts and lease agreements as well as to comply with regulations governing rental properties. This can be quite complex as rules differ from state to state.
- Setting rental amount – Scout the neighbourhood for the going rate on rentals in your locality. This of course is not standardised as the quantum of rent also depends on the aesthetics of your home and the facilities and conveniences offered by you. However, set a competitive price and highlight the strong points of your premises to potential tenants.
- Screening of tenants – This by far is the most crucial aspect of renting out your home if you have to avoid future problems and litigation. Choose a tenant after a great deal of thought and background checks. Remember this person should not only be looking after your premises well but should also pay the rent on time and as per the agreed schedule. Do check their credit history as well as their antecedents to the maximum extent possible. Take references and verify with them discreetly about your tenant. Once this aspect has been looked into, ask for a reasonable security deposit and sign on the lease agreement.
Renting out your home is beneficial both for your tenant and you but only if you take adequate care and use your good judgement to foresee and avoid pitfalls that might arise.