Like many homeowners, you might be curious about the potential benefits of renting out your San Diego area property.
Renting out your home can help you to build equity while someone else pays your mortgage. It can also help you to keep your home while traveling or embarking on other adventures.
Renting your home can help you navigate a crash in the housing market, or simply add a little more cash to your pockets. Whatever motivates you to become a landlord, there are several steps you must take in order to effectively and legally rent out your home.
There are a number of tasks related to making sure that your home is rent-ready. Here is our step-by-step process guide to renting out your house and being a reputable landlord.
Steps to Becoming an Effective Landlord
Do Your Research
One of the first steps that new landlords often overlook is conducting thorough research on the neighborhood and the price range of other similar rental properties nearby. It is important to understand how to competitively price your home to attract the right tenants while still meeting your financial goals.
A property management company is often a great resource for neighborhood analysis, pricing your rental property, and managing the tenant application process.
Develop a Lease Agreement
A lease agreement is a binding legal document between you and your tenants that clearly states the rights, duties, and responsibilities of both parties. This lease agreement is designed to protect and serve both you and your tenants.
Developing a comprehensive lease agreement is a critical step in ensuring that your property and investment are protected from unpaid rent, bad tenants, and damage.
When developing a lease agreement, we highly recommend consulting a lawyer or property management expert in your local area to ensure your lease is compliant with all city, county, and state legislative requirements.
Many first-time landlords skip this all-important step and use lease template from the internet which could place you in hot water down the line should you have a dispute with a tenant. When creating a lease agreement there are key clauses and information to include, such as:
The length of the lease: The length of the lease should include the term of the lease, whether month-to-month leasing is permitted, and the notice needed for both parties to terminate the lease agreement.
Security deposit: The amount you charge as a security deposit and the type of conditions that must be met for the money to be refunded to the tenant.
Repairs: Clearly outline who is responsible for what types of repairs.
Policies for tenants: These policies might include who can occupy the premises, pet policies, unpaid or late rent penalties, and contact methods.
Fee information: Payment of electrical, heat, and other miscellaneous costs.
Eviction terms: The terms that outline under what conditions tenants can be evicted.
Lease termination terms: The terms that outline under what conditions a tenant can end their lease agreement
Advertise Your Property
To attract a good pool of potential tenants, we recommend advertising your property on several different rental property websites. Some popular rental sites include Zillow, Trulia, Apartments.com, Craigslist, Facebook Marketplace and other local websites, community groups, and newspapers.
The more visible and accessible your property listing is, the more likely you will find suitable potential tenants. As a first-time landlord, listing your property on each of these sites requires the creation of an account.
When working with a property manager this process can be significantly simplified, with the property manager posting on your behalf through a customized platform that disperses your rental listing on several popular rental websites.
Find the Right Tenants
Taking the time to screen and interview potential tenants may seem tedious, but it is an important step in protecting your property and yourself. Screening potential tenants can help ensure you find suitable candidates that take care of your property as if it were their own.
A full tenant screening process, including a credit check, can help to identify any potential red flags in a tenant’s past that may be a cause for concern down the road. Some landlords even go so far as to conduct criminal background checks on potential tenants using paid online background checkers.
Consider Property Insurance
Your regular home insurance policy most likely does not cover the specific liabilities necessary for renting out your property.
Consider the benefits of rental income coverage to protect your finances should your rental property be damaged or otherwise unable to rent.
How Can You Mitigate Risk
Becoming a landlord can certainly be an exciting time, especially when you are alleviating a financial burden or adding more cash to your monthly budget. However, finding the perfect tenant for your home is often a longer process than many people realize.
Without careful, thorough research, you could potentially be opening yourself up to several risks and potential liabilities.
As a first-time landlord, working with a property management company can help to mitigate these risks and ensure you are following the most efficient processes to attract quality and trustworthy tenants.
An experienced property manager can help guide you through the entire rental process ensuring your rental home is managed effectively and, most importantly, legally.
By taking a pragmatic approach to renting out your home through a property management company, you can save your own time by delegating tasks to an experienced property manager with access to resources that you as an individual may not have.
Generally, property managers perform a number of key roles including:
Developing an airtight lease.
Advertising your property and screening potential tenants.
Ensuring your property is well maintained and protected.
Working with a property manager will give you the peace of mind that your rental property is being well taken care of without you having to spend the time and resources to maintain it.
If you’re looking for exceptional property management services, get in touch with the team at North County Property Group, who have ample experience helping property owners with their investments in the San Diego area.