Some Things You Should Know Before You Put Property in a “Houses for Rent” Database
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What Should I Know Before I Put My Property in a “Houses for Rent” Database?
If you've decided to become a landlord, you should know some basics before you put your property in a “Houses for Rent” database. The most important general rule: Treat this activity as a business, not a hobby, a game, a casual interest, etc. You should commit yourself to operating a “homes for rent” business.
Should you have any friends, family members, or associates who have acted as landlords in the past, ask them about the good, the bad, and the ugly of rentals in their experience. You will, no doubt, hear some interesting stories. And, don't get discouraged if some things appear less than enjoyable. Operating a successful business is seldom always easy, but often rewarding.
Have a mini-business plan. You should have a plan on how to operate your new venture into the houses for rent market. At a minimum, consider the following:
- Examine the market to set the right rental price for your property. You already know your monthly obligation for mortgage, taxes, and insurance for your property. But you must determine what a true “market rent” should be. By comparing your property with other homes for rent in your area, you'll get a good idea of the amount you can request.
- Make a decision about how long you plan to rent your property. Develop a game plan for your new business. Is becoming a landlord a short-term proposition? Are you going to rent your property only until the housing market recovers from a slump? Or, are you planning to rent the property long-term and possibly acquire other houses for rent? Is this a business or retirement strategy that you plan to continue? It doesn't really matter what your plan states – just that you have one.
- Understand that you'll need some type of “fund” to be available for repairs and/or emergencies. Don't underestimate the importance of this factor. Murphy's Law (anything than can go wrong, will go wrong, always at the wrong time) may rear up and bite you at any time. If you're fortunate to be rather “handy” and good with small repairs or improvements, you'll likely save some money. However, big projects are a) best left to professionals, and b) will have some cost attached.
- Have a marketing strategy that you believe will work. The days of simply placing a “House for Rent” sign in your front yard are effectively over. Sure, it can work if your neighbors have family or friends who might want to live in the neighborhood. But, should that not be reality, you're staring at a monthly cost offset by no income. Develop a strategy that gives your home good exposure, possibly including notifying local real estate brokers and choosing one or more well visited databases, using digital pictures of the exterior and interior of your home to show off its features.
- Learn how to qualify your prospective tenants. Once you have one or more interested potential renters, qualify/screen them. You want a tenant that will hopefully pay the rent when due, take care of your property, and stay for a term matching your wishes. A credit check, background investigation, and employment verification would be very helpful.