Renting Out Your House
Many people consider moving to be one of the most stressful endeavors of their lifetime. The crazy thing is, most people are willing to do it over and over again. This is because it’s hard to avoid. However, as current homeowners, sometimes a sudden move or job change is unavoidable. You may not be in the position of selling your current home right away. So, you may have to rent your house out. Whether you’re changing jobs, moving closer to family, or simply looking for more space—there’s a ton of pros and cons for renting out your house if you are not ready or in a position to sell.
Renting out your house – 7 Incredibly Helpful Tips For New Landlords
My husband and I had a job change a few years back and when the housing market was not in our favor to sell right away, we turned our home into a rental property. Through our own personal experience, we share some helpful tips on how to navigate through the house rental agreement process.
Getting your house ready to rent is very different than putting it up for sale. Here are the tips we learned from renting out our house for the very first time. It is not as overwhelming as it may seem but there are some important things you cannot overlook.
1. Establishing a House Rental Agreement
With all the uncertainty that goes into renting out your home, then establishing a rental agreement shouldn’t be a mystery. Landlord responsibilities include knowing what to expect, finding reliable renters, and also establishing a rental agreement with these new tenants. This is going to save you a lot of time (and headaches).
2. Consider Rent to Income Ratio
Most landlords require tenants to make at least 3x the monthly rent from their main source of income. This can become more attainable for tenants if they have roommates splitting rental costs, but overall it’s important if the rental applicant has the income to afford the monthly rent amount and that realistically fits into their budget.
3. Requiring a Lease Co-Signer
Some tenants may work part-time or are college students, so you may want to consider having someone like a parent co-sign as a guarantor on their application. Adding a parent or guardian as a co-signer on the lease agreement makes them responsible for default rent payments or damage to property. But, hopefully, that never happens to you!
4. Conducting a Rental Background Check
Many landlords conduct a background check prior to approving new tenants. This is done to both verify the accuracy of what the applicant has listed on the rental application, as well as uncover any hidden legal or financial issues that they may not have listed on the application.
Some key elements of this background check that may be considered rental requirements will include:
- Credit Report – A credit score will most likely come up during a rental background check. If the potential rental applicant has any unpaid debts or overdue credit card bills, it may prevent them from paying rent on time.
- Rental Payment and Eviction History – Know that, if a potential tenant applicant has been evicted from a previous residency, or they have overdue rental payments, this will probably come up during the tenant background check.
- Criminal Record – A background check is also going to reveal any prior criminal record. If they have anything suspicious on their record, it is best they explain the situation thoroughly, to ensure it doesn’t affect their application.
5. Verification of Employment
Nearly all rental applications will ask at least one question regarding employment. To avoid any issues with approval, make sure the rental applicant lists their current employer and provides accurate contact information for them.
Without proof of employment, it’s highly unlikely you will want to approve them. If they are moving to a new city or state, it is best they try to secure a job in the area prior to submitting a rental application. Their chances of being approved will increase if they list an employer they’ll be working for once they relocate.
6. Tenant References are a must
It’s helpful to have a few, reliable references on hand in the event that your new tenants default on rent or move out without notice or forwarding address. Not only is a good reference going to increase their chances of approval, but by providing you with positive references can indicate they are responsible and trustworthy enough to make a good tenant.
If you’re unsure who they should list in the reference section of a rental application, here are some appropriate options:
- Previous Landlords – While you may already be planning to call their most recent residence, having a good relationship with their previous landlords and listing them as references will increase their chances of approval.
- Building Manager – If the applicant had more communication with their building’s manager during their last lease, rather than their actual landlord, contacting this reference may be a better choice. This gives you as their potential new landlord the opportunity to get in contact with someone who knows them a bit more closely.
- Professional Relationships – A manager or work colleague is another viable option. This provides a level of professionalism that a friend or family member reference will not.
7. The Bottom Line
The final step to getting through the rental application process is to take it easy. Finding a new tenant applicant can be tough, and it’s okay if you hit a few bumps in the road.
The most helpful thing you can do for yourself during this time is to prepare. Know what’s going to be asked of you, provide accurate and helpful information when tenants are filling out the rental application, and try your best to be somewhat flexible. If you have everything in order, there’s a good chance you’ll find a tenant in no time.
Best of luck, and make sure you understand the risks and rewards of becoming a landlord and renting out your house for the very first time.
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