By Lizzie Weakley
To earn some extra money, you may consider renting out your home. You cannot rush into this process, however, because there are many guidelines that you must review first. Here are some steps to follow if you're serious about renting out your home legally and sensibly:
Check the Reliability of Your Tenants
It's easy to end up with a tenant who is loud, irresponsible, confrontational or worse. Verify the information that a potential tenant gives you about their employment and salary. Obtain professional references to know if they're responsible and capable of paying rent on time.
Determine the Right Rental Cost
No landlord wants to charge too high or too low for rent. Although there are no legal requirements, homeowners can charge any amount they want, but should follow guidelines that make sense. Charge a rental cost that is 1% of your home's current market value. It may be helpful to contact a real estate agent to research the property values of your home and others in the neighborhood. Another option is to review your monthly mortgage bill and charge a certain percentage, such as 20% to 50%, of the total cost to the renter.
Consider Getting Landlord Insurance
Review your homeowner's insurance policy to see the full extent of damages that you're covered for. You may need additional landlord insurance to protect the building and its systems. If the tenant fails to make rent, the landlord can obtain rent default insurance.
Require a Lease Document
A lease is a contract that every tenant and landlord must sign. It guarantees that your tenant will abide by your rules for maintaining your property, paying rent on time, meeting curfews, etc. The consequences include an eviction or prompt legal action.
Handle an Eviction Properly
An eviction is usually the biggest problem that landlords and tenants have with each other. Be sure to follow common rules and restrictions that pertain to how you should carry out a legal eviction. The process starts by giving a notice and providing enough time for the tenant to respond. To ensure your tenant's trust and respect, consider including these terms in your lease agreement.
Deciding whether or not to rent out your home is never a fast or easy task. Not taking the time to choose the right tenant could turn an easy money-making situation into a disaster. Make sure that you choose the right person, charge the right costs and keep your home protected as much as possible.
Lizzie Weakley is a freelance writer from Columbus, Ohio. In her free time, she enjoys the outdoors and long walks in the park with her three-year-old Husky, Snowball. For more information on real estate agents, click here.