The Reluctant Landlord

Many home owners have become reluctant landlords because of the weak real estate market.  Rather than wait for months and months for a possible sale, owners are choosing to rent out their properties.

If that is your decision, you have some work to do.

You should first decide whether you want to handle the rental process yourself or turn it over to a property management company. If you take on the responsibility, you are obliged to fix any problems (leaky faucets, cooling and heating issues, etc.) or find professionals to do it.

If you are going to handle it yourself, you need to determine a rental value. The best way to do that is to check with property management offices with rental listings in your area, look at classified ads, and explore your local MLS service if it is available to the public.

Once you’ve set a rent range, determine your market.  Who are you going to rent to-- students, families, young professionals, then market the house to them. There are so many rentals available you’ve got to think like a renter, because they’re going to choose the most exciting option.

Familiarize yourself with local laws dealing with rental properties. It’s important to understand the eviction process, how to handle security deposits and what type of access you have to the property once it’s rented. You may want to consult with an attorney before writing a lease. A well-written lease is crucial to protect your property. It will help you evict a tenant or hold them accountable for damage if necessary.

Obtain a rental application. You should be able to get one from your local or state Realtors Association. The application should help you quickly determine whether you want this person for a tenant. Consider asking about pets, smoking and employment, for example.

Ask for references and screen your potential tenants. Call former landlords and ask about the person’s rental history. Verify that the references listed are really landlords and not the applicant’s friends posing as landlords. Hire a service to run a criminal and financial background check on the applicants. Be wary of tenants with previous evictions or bankruptcies.

Collect a security deposit equal to one month’s rent. This will help cover any damage to the property and protect you if a tenant moves without paying rent. If you allow pets, collect a NON-REFUNDABLE pet deposit of at least $200 or $300. Do not accept partial rent payments. Accepting money from tenants who don’t pay the full rent can make it more difficult to evict them

Walk through the property with the tenant before he or she moves in. During the walk-through, make notes and take photos of any property damage such as chips in the tile, spots on carpeting, etc. You and the tenant should sign the paper to acknowledge the condition of the property at the start of the lease.

Keep tabs on your property. Drive by at least once a month and look for signs of trouble such as garbage in the yard, extra cars in the driveway, or excessive wear and tear. Make arrangements to walk through the property three months into the lease to see how well the tenant is caring for it. (Make sure you give the proper notice required for entering the property.)