Did you recently decide that you’re going to start renting out an apartment, a condominium, or, better yet, a home that you own?
If so, you’re officially well on your way to becoming one of the 11 million landlords in the U.S. today. And the good news is you couldn’t be getting into the business at a better time. There are more people renting properties in 2018 than at any other time since 1965.
But before you start celebrating too much, take a step back and realize that the real work is just beginning. You need to start the process of taking on a new tenant for your property right away so that you don’t lose money as a landlord during your very first month.
Here is a newbie landlord’s guide to taking on a new tenant.
Let People Know Your Property Is For Rent
The first thing you’ll want to do when looking for a new tenant for your property is let people know your property is for rent. This will ideally create a large pool of interested candidates for you to choose from.
You can market your property by utilizing the services of a real estate agent, putting an ad in the local newspaper, or even leveraging the power of social media. But whatever you do, be aggressive in your approach and let it be known that you’re looking for a new tenant.
Create an Application Process for Potential Tenants
In addition to marketing your rental property, you should also create an application process for potential tenants. Send the application out whenever someone contacts you about renting your property.
In your rental property application, you should ask for a person’s:
- Full name and current address
- Employment status
You should also ask people to allow you to run a credit check and a background check. Additionally, you should ask people to provide you with several references, including their previous landlord, so you can screen them fully.
Some landlords also choose to ask people to pay an application fee. This helps weed out those people who might not be all that interested in your property in the first place.
Choose the Applicant You Like Best
Once you’ve received at least a few applications for your rental property, go through them and see which applicant you like best. If you have a tough time deciding on just one, use the references people have provided to your advantage.
At the end of the day, you want to rent your home to someone who seems responsible and who will pay the rent on time each and every month. The info people have given you should help you figure out who is most likely to do that.
Provide Them With a Lease Agreement
After you have selected the person that you want to rent your home to, call them up and inform them of your decision. Then, ask to meet with them so that they can sign a lease agreement.
Coming up with a lease agreement and having a new tenant sign it is arguably the most important part of this entire process. Your lease agreement will spell out everything from how much the person will pay you every month to the rules the person needs to follow while living under your roof.
Ask for a Security Deposit
If you misjudge a person and they end up either not paying their rent or damaging your home while living in it, you want to make sure you’re protected.
Asking for a security deposit up front is one way of increasing the chances of a renter taking good care of your home. It’ll also serve as a safety net just in case a person decides to suddenly stop paying rent or move out unexpectedly.
Some landlords ask tenants to put down a security deposit equivalent to one month worth of rent. Others ask for more than that. But regardless of what amount you choose, you’re entitled to ask for a security deposit as part of your lease agreement.
Just make sure you set the security deposit aside so you can give it back to a tenant when they move out one day.
Tell the Person to Obtain Renters Insurance
Tenants are not required by law to obtain renters insurance when they move into a rental property. But as the landlord of a property, you can require a new tenant to get their hands on a renters insurance policy.
Renters insurance will come in handy if a tenant’s belongings are ever damaged due to a fire or a burglary. In some cases, it may also cover a tenant if someone is ever hurt in your home while they’re living in it.
Transfer Utilities Into Their Name
If your new tenant wants to keep the lights on in your rental property all the time and crank the AC in the summer and the heat in the winter, they’re free to do it. But you obviously don’t want your name on the utility bill if they do.
Have your new tenant transfer the utilities into their name prior to moving into your property. It’ll make the utilities their responsibility when they live in your home.
Do a Final Walkthrough
On the day your new tenant is set to move in, walk through your home with them before you hand over the keys.
Make a note of anything that might be damaged in your home and let your tenant ask you questions about how certain things work. This is your last opportunity to fill your new tenant in on any rules you might have for your home before they start living in it all the time.
Take the Proper Precautions Before Taking on a New Tenant
As you can see, taking on a new tenant can be a lot of work. It requires you to put together an application process, come up with a lease agreement, and more.
But you’ll be glad you took the right steps when your tenant moves into your home. There’s a much better chance of you being happy with your tenant when you put them through the wringer before letting them move in.
Check out our blog for more information on the rental laws in your state.