Whether it’s to pay down a mortgage or cover the costs of purchasing another home, renting your house can be a creative way to bring in additional income.
But there are important measures to make sure you find the right renter and minimize the headaches that can come from being a landlord.
Here are seven key steps to making it work:
Review your insurance
Find out whether you need to change your homeowners insurance to a landlord policy.
Landlord insurance protects the dwelling and it can also reimburse you for lost rental income in the event of a claim. Landlord insurance doesn’t cover tenants’ possessions, so you might want to require renters insurance in the rental agreement.
Enhance curb appeal
Rental listings need it just as much as houses for sale.
To attract tenants, spruce up the yard, clean rooms and carpeting, touch up paint, empty closets, and check that light bulbs work. Then, pretend you’re the renter and inspect like a sleuth.
Know what the competition is asking.
Check major real estate sites, along with local real estate firms, and visit a competitive property or two to come up with a fair price.
Decide whether rent will be just for brick-and-mortar, or if it will include utilities and/or landscaping maintenance as well.
Market for wow
To draw traffic, snap listing photos of your home that make the most of its amenities, like a spa-style bathroom or upgraded kitchen appliances.
You can post your ad for free on sites like Craigslist, or on the billboards in local coffee shops or groceries.
Depending on your timing or location, it might make more sense to list your property with a real estate agent or engage a paid real estate site to access a bigger pool of lookers.
Finding a solid tenant can be tricky, which is why the screening process is so important.
Some things you can do to increase your chances of finding a good tenant include: verifying employment (ask for a pay stub or call the tenant’s employer); securing references (call current/past landlords); and running a credit check (all the major-credit reporting agencies offer this kind of service).
Make it legal
Set expectations by having both sides sign a lease agreement.
Inexpensive templates are available online but, because you want to make sure to account for local regulations, it might make sense to consult with an attorney to draw up a contract.
You’ll also want to take a security deposit upfront, equivalent to the rent charged—one month for a monthly rental, for instance. And discuss an appropriate payment schedule.
Be a good landlord
Provide a list of helpful names and phone numbers for maintenance and emergencies, such as your plumber, police and fire departments, a neighbor who’s around, along with some direction on who to call under various circumstances.
If you’re gone for a few months, you may want to hire a property-manager (who might charge anywhere up to 15 percent of rent).
Once you have everything buttoned up, and before renters take possession, you’ll want to do everything you can to make the place feel like home.
Clean the house, empty the refrigerator and leave a nice note wishing your tenant well—all good ways to get the landlord-tenant relationship off to the right start.
This article comes from the editors of The Allstate Blog, which helps people prepare for the unpredictability of life.