RISMEDIA, March 10, 2008—Renting out a house isn’t rocket science, but there are some basic rules that should be followed to increase your chances of success: Continued >
Richard says...
I receive many inquiries from investors and home sellers who for one reason or another can not sell their homes right now by the usual means of cashing out and moving on. Renting can be a very good money making strategy if done right and getting all of the ducks in a row.
If you keep your present house as a rental, you may still be able to finance and buy your next home. The rental property income is considered when obtaining financing on your next home. If it is rented out at the same price as your payments, it is a wash. If for more than your expenses, then it is added income on your financial statement. There are additional benefits to owning rental properties but I won't get into them at this time.
Most horror stories I have heard about rentals is related to not following sound practices as outlined in this article and taking short cuts. These "time and money saving" short cuts can ultimately be a very costly financial and legal disaster to the novice landlord.
Some things to consider are...
- Proper cleaning of the property is very important. Have you gone to rent or buy a home with dirty bathrooms and an oven with crusted food in it? "Next" is what most reasonable people would say.
- Know what the rents are for similar properties in your area. This is business. Get your numbers. Your property is competing with others in the area. Make sure you are priced right. Buyers of any product or service look for value in what they are paying their hard earned money for just as you do.
- Do some creative marketing and get the word out that you have a nice property for rent. There are many creative and inexpensive ways to do this.
- How about not screening prospective tenants properly? This is a big one. Yes, it costs a few bucks but....would you like to trust your home (expensive investment) to a deadbeat or have it turned into a meth lab ? Have a non-refundable application fee cover this expense. Large apartment complexes do, so why not you?
- Know and follow the laws relating to landlord and tenant rights. Have a well written lease agreement in place. Yes they are renting your property, but you can not do anything you want to tenants. Treat your tenants with fairness and respect. They are putting money in your pocket. They are not the enemy. They may be the perfect buyer for your property in the future.
Have a profitable day,
Richard Pomisel
