What You Need to Know Before You Rent Your Home

By Catherine Powell

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Whether it’s due to retirement, relocation or divorce, there comes a time in every homeowner’s life when they are forced to make one of the toughest decisions: sell or rent their home.  Depending on their situation, a move might be only temporary, a relocation could only be speculative, or a retirement could leave the homeowner with an option to rent that could return a tidy income if the house is paid off.  The question in all these cases comes down to what do I need to know before I rent my home? 

1.      How far away from your rental property are you going to wind up? – If you only intend on moving across town, then managing and maintaining the rental of your home will be all the easier.  If you plan on moving across the state or the country, you will need to hire a realtor to manage your home while you are away.  This will cut into your return on investment, since the management company will take a percentage of the rent every month.  Once you factor in the cost of maintenance, insurance and taxes that you will pay over and above the management fee, what’s left to put in your pocket could make you think twice about renting as opposed to selling your home.  Of course, hiring a property manager will also mean you won’t have to spend time and money advertising your property, creating a leasing agreement and dealing with tenants. 

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2.    The reality of being the landlord. – Should you decide to take over the property management responsibilities on your own, you will need to understand what this responsibility entails.  If you don’t like getting called in the dead of night to deal with a broken water pipe or a leaky roof, this probably isn’t the job for you.  If having to evict a non-paying tenant from your property makes you break out in a cold sweat, perhaps you had better think twice about being a landlord.  Like it or not, when you rent your property, you will be required to deal with issues that effect the bottom line.  That’s because while you no longer reside in your home, you still own it.  At least you do to a point.  When something breaks, you will need to fix it or hire someone who will fix it for you.  If your tenant turns into either a slow pay or a no pay, you will have to deal with the problem or file the legal paperwork that will eventually allow you to evict a non-paying tenant. 

3.    The letter of the law – To begin with, you will need to create a rental agreement.  While you can find sample agreements online, I recommend you hire an attorney that specializes in real estate to draw one up for you.  A well thought out rental agreement can save you a great deal of time and trouble should the renter become a problem. The agreement needs to include such things as:

a.       How long is the lease term? 

b.      How much should you charge for a security deposit?

c.       Rental due dates and any late fees

d.      Who’s responsible for repairs?

e.       A list of all tenants, as well as giving or denying the renter to sublet

f.        The upkeep the landlord or tenant is responsible for, such as lawn care

g.      Eviction terms

h.      Pet-related information and or fees 

i.        The beginning and end dates of the lease

j.        Anything related to HOA fees

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4.      The devil you know - Another thing you’ll want to spend a little time and money on is to perform a background check on any potential renter.  This should include both  credit and criminal history.  Then you’ll need to check the references of any prospective tenant that should include a phone call to their employer as well as their previous landlord.  Understand that once a tenant takes possession of your property, your access to it will be restricted.  This means if you get a bad tenant, the amount of damage they can do to your property should give you pause to finding the best renter possible. 

5.      How do you go about advertising your property? – While there are plenty of places both online and offline to advertise a rental, you need to make sure your ads comply with all local and state laws.  You’ll also need to determine a competitive price for your property if you hope to secure a tenant.  Additionally, you’ll need to allot sufficient time to deal with all inquiries regarding your property.  This includes fielding phone calls, responding to texts and showing the property to prospective tenants. 

6.      What kind of insurance do you need to rent your home? – Another thing you’ll need to change before you rent out your home is your insurance policy.  That homeowner’s policy that you have had for twenty or more years doesn’t apply if you choose to rent your property.  What you’ll need is a rental home insurance policy that will cover your property, legal costs, loss if income if your tenant stops paying rent, repair, liability and any potential medical expenses that may be required in the case that someone is injured in your rented home.  What the policy won’t cover is any coverage of the renter’s possessions, furnishings and property.  If your home should be destroyed in a fire, be cleaned out by burglars or be washed away in a flood, you as the landlord are not responsible for reimbursing the tenant of losses. The only wan to have that covered would be for the tenant to get renter’s insurance.   If you would like to get a free instant competitive liability quote click here.

7.      Care and feeding or your property– In addition to maintenance of your rental property, you also need to factor in the time and money it takes to make it ready for the next tenant once the current one moves out.  It isn’t at all unusual to have to do such things as repaint walls, replace carpets and fine tune the landscaping after a tenant moves out.  Even during the lease, you can expect to either make needed repairs yourself or hire a contractor or handyman to make the repairs to your property.  Since ther’s no such thing as a sure thing when it comes to renting your home, it’s only by calculating all the variables involved that you can decide if it’s the best bet for you.  

Catherine Powell is the owner of A Plus All Florida, Insurance in Orange Park, Florida.  To find out more about saving money on all your insurance needs, check out her website at http://aplusallfloridainsuranceinc.com/