It is not uncommon to give consideration to the idea of renting out your property since it comes with the benefit of earning an extra income that is consistent. However, this does not mean that renting out an apartment is easy and straightforward especially since there are a lot of things you will need to research on to ensure that your venture will result in consistent cash flow while remaining within the law. Being a landlord also comes with a lot of responsibilities that you need to be fully prepared to handle.
How to rent out an apartment? In order to rent out an apartment, you need to be familiar with the stipulations of the landlord-tenant law in your state to ensure that you are not breaking any. Prepare the rental unit adequately ensuring that it is in top shape by cleaning and carrying out repairs before the tenant moves in. Make sure that you decide whether you will be furnishing the apartment, or leaving it unfurnished, as well as whether you will allow pets in the unit.
You will also need to advertise the space in order to find a tenant to rent it. Before you settle on a tenant, it is important to carry out a background check to ensure that they will not give you trouble in the future. Prepare a lease agreement that clearly outlines the responsibilities of both the landlord and tenant as well as other terms such as the when the rent is due and the utilities to be paid.
Making the decision to rent out an apartment is the easy part. The hard part comes in where you have to ensure that the apartment is in top shape before you rent it out in addition to researching how to go about being a landlord so that you are not breaking any laws but still making as much money as possible from collecting rent. Here is what you need to know about how to rent out an apartment.
1. Understand the responsibilities that come with being a landlord
For starters, determine whether you can handle the responsibilities of being a landlord. While renting out your property comes with benefits such as an extra income and tax breaks, there are tasks you will be expected to fulfill as a landlord. You will need to take care of the repairs and maintenance of the unit, collect rent on a monthly basis, and keep an eye out for any damage that tenants may cause to your property.
2. Familiarize yourself with the law
It is important to be conversant with the law if you intend to rent out an apartment. Consider consulting with an attorney who is experienced in landlord-tenant law in order to determine how to act in accordance with the local, state, and federal laws.
Local laws usually dictate the specifics for the facilities, structure, and essential services such as heat and water. In some areas, the local laws may also encompass some of the same specifications as the state laws, such as those covering the management of security deposits, the eviction of tenants, and raising the monthly rent. You can look for copies of local laws regarding landlord-tenant relationships online or check with your local library or mayor’s office.
In addition to determining matters involving security deposits and evictions, state laws also regulate other landlord-tenant laws such as housing standards, repairs and maintenance, and the right of the landlord to access the property. Because these laws tend to change periodically, it is important to request up-to-date information on the various rental laws.
Federal laws regarding landlord-tenant relationships cover issues pertaining to discrimination and landlord responsibilities concerning environmental health hazards such as lead paint and asbestos. As a landlord, you are prohibited from discriminating against race, gender, religion, disability, national origin, handicap, and familial status.
3. Prepare the property beforehand
The apartment has to be in top shape before a tenant moves in.
- Repair and maintenance – It is important to inspect the apartment properly in order to determine which areas need repair and maintenance. Make sure that the safety appliances installed in the apartment such as smoke detectors work. Add a new coat of neutral paint to the interior and exterior to brighten up the apartment as well. If you must, use the services of a professional home inspector who will assess your home and point out any existing or potential issues.
- Cleaning the apartment – Clean both the inside and outside of the apartment. Make sure that all the surfaces in the apartment are spotless, paying close attention to areas such as the kitchen and bathroom. Consider getting the apartment professionally cleaned before a tenant moves in.
- Add eye-catching details – You may add details such as plants or fresh flowers to the apartment to make it feel more welcoming. However, try to refrain from adding too many personal details to the apartment since this may turn off some potential tenants.
- Securing the apartment – Make sure that the apartment is safe by adding locks to all the windows and doors, and make sure that the security works properly.
4. Decide on what you want to offer tenants
Make a decision on what package you want to offer tenants. Determine whether a fixed-term tenancy or a month-to-month lease will be more appropriate and whether you will furnish the apartment or leave it unfurnished. Decide on whether you will allow pets in the apartment, and depending on how big the apartment is, determine the maximum number of tenants you will allow in the unit.
5. Set a competitive price
In order for the cost of rent to be reasonable, make sure that you familiarize yourself with what other similar rentals in your neighborhood are going for. You can also consult with a local realtor who may help you determine a fair value of the apartment based on the demand. Make sure that you also base your decision on the square footage, location, appliances and furniture included, view, and layout of the apartment.
When setting the cost of rent, make sure you that you also take into account expenses such as taxes, mortgage payments, utilities, and any legal fees. This way, you can ensure that the rent you set will result in a profit instead of incurring losses.
6. Advertise the apartment smartly
You will have to inform potential tenants that you have an available unit in t order them to express interest. You can do this by advertising the apartment through online listings, local dailies, and word of mouth. In your advertisement, make sure that you highlight all the attractive aspects of the apartment as well as any other relevant information such as the price, size, and location. You also have the option of hiring a real estate agent who can help you find a compatible tenant at a fee.
7. Screen prospective tenants thoroughly
It is important to carry out a background check on potential tenants to ensure that there are no questionable details that would affect their tenancy. Ask interested tenants to fill out a rental application form where they should provide their employment status, their earnings, and references among other personal details. Make sure to confirm if they are employed by contacting their employees as well as requiring pay stubs as proof of their earnings. Conduct a credit check as well to gauge how responsible they will be as tenants in addition to contacting their former landlords to get information about their rental history.
8. Drawing up a legal contract
You will need to put together a rental agreement that clearly outlines your responsibilities as well as those of the tenant. You will find templates of standard lease agreements online, but if you have very specific requests, opt to hire an attorney. Either way, make sure that you go over all the terms carefully and consult with your legal support if there is anything you are not too sure about. Make sure that details such as the name of all occupants of the apartment are included. The lease should include terms such as the date when the rent should be paid, duration of the occupancy, pet policy, eviction procedure, and repairs and maintenance.
9. Inform your insurance and mortgage companies
Make sure that you notify your mortgage company that you intend to rent out your apartment if you are taking out a mortgage for your property.
You will need to make the change from a homeowner’s insurance policy to a landlord-specific insurance policy, which is more expensive than the former but more appropriate when you have a tenant living in the property. You should get a landlord liability insurance to provide you with protection in case somebody gets hurt on your property, as well as landlord property insurance that will take care of losses that result from vandalism, thefts, floods, and fires.
It is important to be well-prepared if you intend to rent out an apartment. Research as much as you can on areas such as landlord-tenant law and what your responsibilities constitute when you are a landlord. You will also need to prepare the rental unit adequately and ensuring it is in top condition. You will need to screen potential tenants in order to weed out the undesirable ones, as well as a lease agreement ready for the tenant you select to sign. Whether you have lived in the apartment you want to rent out or it is an investment, make sure that you make informed decisions to ensure that you get the best returns and protecting the property and yourself at the same time.