If you've made the decision to rent out your home, be sure you follow these tips for getting your domain ship-shape for your new tenant.
1. Clean it up.
2. Make it safe.
Got any old fixtures or electrical circuits that might present a hazard? Are your smoke detectors and fire extinguishers up to date? Are emergency exits free of obstacles? Bulletproof yourself (and your tenants) against any unhappy accidents by making sure all safety and security measures have been checked and updated where necessary.
3. Let important parties know -- your lender, your town...
If you’re still living in the property and are renting part of it out to a tenant, you don't need to tell your mortgage lender, but if you plan on living somewhere else while the tenant has your home, you're obligated to notify your mortgage company. The company will need to give you permission to rent it out, and it may cost a fee. You should also notify the local government of the town you live in.
4. Landlord insurance
You may already have homeowners insurance, but even if you do, you'll need to get landlord property insurance, which costs more, but you'll want the added protection in case something bad goes down with your home.
5. Property management?
This is a tough decision to make, and the answer will depend on your time and money. It certainly costs less if you manage your property yourself, but are you ready to deal with calls in the middle of the night when your tenant finds that the pipes in your building have frozen up in the middle of the winter? Property management companies charge around 10% of monthly rent for their services, but it might be worth having the headache off your plate if you can afford it.
The big question -- how much are you going to charge? Check around your neighorhood and see what similar homes or apartments are going for. You can even use local listing services like oodle.com to list your apartment. A good rule of thumb is to assume that about 25% of the rent you collect will be used for monthly upkeep, so plan accordingly.o
Sound Off...What do you think? Join the discussion...
This morning, my kids asked me about how I became interested in money. There are a couple of reasons, but we got talking about my job in mortgage banking and how I worked with delinquent borrowers and that I got to review the original underwriting on those mortgages, and that I saw a lot of […]