Think About These 10 Things Before Renting Your Property
When life changes and there’s a sudden need to rent your home, there’s a lot to consider when converting your residential home into a rental property. Whether you’re renting a room or leasing out your property, take the time to review these questions and protect yourself from expensive mistakes that could not only impact the bottom line, but also your investment goals and objectives.
- About how much are your monthly fixed expenses for the property? This includes taxes, mortgage, HOA fee, and insurance. You want to be sure that all of these costs are more than covered by the monthly income generated from your rental property, so you can afford your monthly expenses and have a cushion for any unplanned repairs that inevitably arise.
- Will you allow pets? If yes, what type? Size limits? If pets are a go, you will need to decide on the best course of action regarding increased wear and tear. Either an additional monthly fee or a refundable pet deposit can be required to cover the cost of any pet damages and should be included in the lease agreement. Charging your tenants monthly for their pet will increase your monthly revenue and allow you to keep that money whether there’s pet damage or not. On the other hand, charging a refundable pet deposit will need to be returned if there’s no pet damage upon move-out. If there’s pet damage upon move-out, an itemized list would need to be sent to the tenant of how much was spent to repair the damage to justify keeping all or part of the pet deposit.
- Does the property have parking? Indoor or outdoor? How many vehicles? If parking is provided, the lease should reflect how many spaces will be provided to the tenant. If there is limited parking, you may want to consider marking the tenant’s space(s) and any guest spaces clearly so there is no confusion that may lead to future parking issues. Also, is the tenant responsible for their own snow removal? If snow removal of the parking area is the responsibility of the tenant, that would also need to be stated in the lease agreement.
- If applicable, will you take care of snow removal and lawn care? Are you currently under contract for those services? If you are under contract for these services, these expenses should be factored into your monthly fixed costs for the property and taken into consideration when determining the price of rent. If lawn care and snow removal are the tenant’s responsibility, the lease agreement needs to include this language and any pertinent restrictions and upkeep expectations.
- Would heat, electric and/or wireless be included? Which ones? If so, what’s the approximate monthly cost? If some or all of the utilities are included, make sure that you can determine the monthly cost of each based on historical payments. Whatever utilities are included, these expenses should be factored into your monthly fixed costs for the property and taken into consideration when determining the price of rent. You may also consider padding these costs for the time spend managing bill payments and convenience it provides to the tenants.
- Is there onsite storage? If there is storage, it should be clearly marked. Additional value to the tenant could be found in providing secure storage, so that valuables can be locked safely within the storage unit.
- Is there onsite laundry? Onsite laundry is a valuable benefit to tenants and should be considered in setting the rental price. Coin-op laundry is an option that covers the cost of additional utility use resulting from w/d use. If laundry is provided within unit, the cost of water, hot water, and electricity are to be assumed by the landlord and should be factored into the rental price.
- Has the property been tested for radon? You’re required to provide this radon disclosure.
- Was the property built before 1978? If so, you’re required to provide this lead paint disclosure.
- If you own property in the Greater Portland, Maine, area – have you registered it locally? Here are the forms you’ll need:
- Portland: all rental properties, plus additional registration for short-term rentals
- Cape Elizabeth: short-term rentals
- Scarborough: short-term rentals (except single-family homes) – call Town of Scarborough Planning and Codes Office at 207-730-4040
Organizing this info now – and keeping it updated – can make your life simpler, your rental more profitable, and tenant turnovers smoother going forward. Since there is quite a lot to consider before renting your home, working with a property management company can simplify the process and provide peace of mind. A property manager will help set a clear vision to increase the value of your investment and ensure your rental objectives are met.