You bought a house or maybe two, and now you think you are ready to jump into the property rental game. Slow down, not so fast! There’s a lot of risk associated with renting your properties to strangers and it will require a calculated and methodological approach to make the end result as profitable and hassle-free as can be.
Figure Out What You Want
What are your goals when it comes to this investment? Are you looking for tenants to just pay off the mortgage? Do you want frequent turnover that will allow you to raise the prices between tenants? Are you looking for long-term residents that will save the hassle of finding new ones and treat your house like it was their own home? Are students a possibility?
Determining what your level of desired involvement is, along with how much you are willing to invest into the maintenance and upkeep of this property is an excellent starting point. You can then make changes to your property that will attract the tenants that you have in mind, whether young professionals, families, students, or older citizens.
Do Your Research
Before you put your property up for rent, it’s important to know what the market is for similar accommodations. Check the internet, local classifieds, or even pretend to be a potential tenant and check these places out in person. That will help you gauge the going price for a property like yours and the kind of tenants that it attracts.
Put Together a Good Application for Rent
Once you list your property, the floodgates are open and you will have a hard time deciding on which tenant you will want living in your investment property. A comprehensive application form will help you glean the right information from the interested parties and allows you to get to know them at a different level than what you would get at a showing. Don’t make it too long as it may scare them off, but make sure that you feel comfortable with the facts you get from it.
Draft a Rental Agreement
If you don’t want to have issues in the future with late payments, no payments, extensive damages, or more, build a strong rental agreement/contract. Enlist the help of a civil lawyer who will advise you strategically, in your best interest and in order to optimise the results on file. This is your weapon for issues down the road, so make your bed properly because you will have to sleep in it later.
Hindsight seems to be 20/20, but let us give you a glimpse of foresight: take pictures! Before your tenants move in, make sure that you have detailed pictures of the entire space. That includes slight damages that are existing, walls, railings, bathroom fixtures, and more. These are your proof of what your property looks like before the new tenants move in. Get your new residents to sign a copy of these pictures, agreeing that this is what the current state is, therefore eliminating disputes and potential “that was already like that!”s down the road.
Choosing the right tenants is key to running a successful rental property. You want people who are fair, respectful, attentive, and will love their home as if it was their own property. These stewards of your investment will dictate the state in which your property is and what it will look like when it’s back on the market again, whether for sale or for rent.
Running a rental business can bring great returns if done properly. If not, you risk being involved financially and legally in a mess that no one wants to deal with. By taking the time and essential steps from the get go, you can avoid headaches and start collecting those rent cheques!