Renting your home may seem like a straightforward process, but without careful preparation you are likely to encounter a variety of challenges that will ultimately impact the return on your investment. In fact, managing a rental property involves many specialized skills so homeowners often prefer to work with professional property managers to ensure a successful rental experience. Nevertheless, understanding how to prepare your house for rental is important whether you manage the property independently or rely on professional services. Let’s look at some of the most important things to do before renting your house.
Insurance
Rental property insurance or landlord insurance is a must have. These policies will generally cover many of the standard elements found in your homeowner policy but will also protect you from damage to your property caused by tenants (and their pets) as well as provide you with liability insurance in case tenants take legal action. Carefully review your insurance policy to know where you’re covered and where you’re not – these policies generally do not cover contents of the rental unit which would be important if you are renting a furnished property.
Finances
Keeping careful track of your finances can have a huge impact on your rental income. Not only do you need to track rental income and expenses such as repairs and maintenance, but you also want to record tax payments including rental income and property taxes. Working with an accountant is one of the best ways to manage your property finances and make sure your records are in order when it comes tax time.
Lease Agreements
In British Columbia (BC), there is a standard lease agreement for all residential tenancies. The Residential Tenancy Act outlines the roles and responsibilities of tenants and landlords as well as the finer details of a tenancy agreement. If you are renting a property in BC, you need to be familiar with this act. It might also be worthwhile to enlist a lawyer to make sure you are well-informed about amendments to this act as there have been recent Supreme Court of BC decisions that impact how the act is applied. If you are renting in other jurisdictions, a real estate lawyer can help you draft a lease agreement that follows legal standards while also positioning you to protect your property investment.
Tenant Selection
Even before you are ready to rent your property, you need to prepare for how you are going to select your tenants. Careful screening and selection should include employment and credit checks as well as references from employers and former landlords. You should have a sense of the minimum monthly income tenants would require to maintain their tenancy, but other factors as well. Is your property suitable for pets? How many tenants can occupy the unit? What are your smoking policies?
Inspection
Finally, make sure to have your home professional inspected to identify any repairs before tenants take possession. Make sure you maintain a record of your inspection in case you need to take legal action against tenants who cause damage.