HOW TO RENT OUT YOUR HOME AND OTHER REAL ESTATE PROPERTY
Whether you’re buying multi-unit properties or renting out your home, leasing out real estate can be a wonderful financial opportunity. But, being a landlord takes some learning and work. We’ll cover the basics in this article.
DO A LITTLE FINANCIAL ANALYSIS.
Experts suggest that renting out your property is a long-term investment, not a get-rich-quick scheme. Make sure to do your research about the renting market in your area so you can have realistic expectations and a plan.
FIGURE OUT WHAT TO SET RENT AT.
If you’re ready to take the next step, it’s time to figure out your expenses as a landlord against how much you want to make. Consider your mortgage payment on the property (if you have one), property taxes, insurance, maintenance costs, and any yearly upgrades and care the property might need.
The other side of that coin is that while you’ll need to cover your expenses and then some (to turn a profit), you’ll also need to remain competitive in your rental environment. How much can you afford to cut your profit in order to attract tenants successfully? Can you instead offer something additional or luxury compared to the competition in order to attract tenants who are willing to pay a little more?
DECIDE WHO WILL MANAGE THE DAY-TO-DAY.
The best thing about being a renter is being able to call someone 24/7 for help with … almost anything. But, who is going to be responsible for fixing that leaky toilet in the middle of the night?
If you’re planning to handle everything yourself, it’s time to start collecting names of local experts who can handle whatever your blindspots are. Make sure to research potential partner contractors thoroughly. If they make a mistake or fail to deliver, it will be your fault in the eyes of the tenant.
Want a little help managing your property? You’re in luck, because in addition to helping Madisonians buy and sell property, we offer property management services. We can help you find tenants, manage daily needs, collect rent, and so much more! Contact one of our realtors for more information!
LEARN THE LAWS.
Landlord-tenant laws are dictated by both state and federal law. According to Avail, Wisconsin landlord-tenant laws are landlord-friendly, so that’s a positive for you. You’ll want to read the details closely, which will cover items like security deposit requirements, payment grace periods, pet laws, rental licenses, and more. Renters have rights, and successful landlords respect those rights. This graphic is a great way to start learning.
Note that there are federal laws around housing safety and anti-discrimination. Check with the Department of Housing and Urban Development, research Federal Anti-Discrimination Law, Federal Housing Law, and the Fair Credit Reporting Act. (Via Trulia)
DEVISE YOUR RENTAL POLICIES.
You’re renting out your property, so you have a choice in what happens in said property. Will you allow pets? Who pays for utilities, and which ones? Who is in charge of snow removal for all those blustery Wisconsin days?
WRITE A LEASE.
There are plenty of online tools for writing leases, such as Rocket Lawyer. To be totally safe and legal (and protect yourself from issues down the line), though, you’ll want to run everything by a lawyer.
PHOTOGRAPH YOUR PROPERTY.
Before you take marketing-friendly photos of your property, you’ll need to take detailed shots of the condition of your house or rental unit before it lands in the hands of a renter. If renters cause any damage, you’ll need time-stamped photos to prove that the damage occurred after the renter moved in.
GET YOUR PROPERTY ON THE MARKET.
It’s time to take some awesome photos, gather specs about your property (style, heating/cooling, parking, laundry facilities, etc.), and post it on rental sites like Zillow and Trulia.
Zillow has tips for writing attractive listing descriptions, but the basics are:
Format your description correctly for each platform
Use creative words and strong imagery to highlight your property’s features
Avoid no-no words (“fixer,” “TLC,” “bargain,” and “nice”)
Focus on brand names, upgrades, and special features
Make sure you’re spelling everything right and listing accurate information
MEET AND SCREEN TENANTS.
Once your property is on the market, you’ll be receiving contacts from potential renters. Set up showings with them and get to know them as people. Do you like them? Do you trust them?
Once you know which potential renters you’re interested in, you’ll need to have them fill out an application while you perform the following screenings:
Ask for their social security number
Run a credit check
Get three or more references
Confirm their employment
PROTECT THEIR SECURITY DEPOSIT.
Congrats! You’ve been successful in leasing out your home or rental property. The final step in the process is to protect their security deposit as you legally owe it back to them when they are done renting with you. Trulia suggests keeping it in a separate account (some states require this, but Wisconsin does not).
Overwhelmed? You’re not the only one. Diving into the world of real estate rentals can be very stressful, as there are many details in the planning process that are key for successful (and legal) transactions. On top of that, managing the day-to-day can be time consuming and requires a high level of organization and communication skills.
If you’re not ready to handle all aspects of renting out your property yourself, but want to take advantage of this great investment opportunity, we’re here to help. We have an impressive portfolio of properties that we manage for our rental property clients. Our clients report that, with us as property managers, they have happier tenants, less turnover, and more time on their hands to work on growing their rental business or other ventures.
Want to learn more? Give us a call at (608) 957-2683. Our real estate team would be happy to tell you all about our services and see if they’re a good fit for your needs.