Have you ever thought about renting out your basement, vacant bedroom, or your entire home? Have you ever considered that it might be a good source of income? If this sounds like a feasible option, here are four steps to get you started.
1. Choose the correct tenants.
Most single-family homeowners enjoy the fact that they don’t have to worry about noise or awkward hallway encounters from anyone else. So, when you decide to rent out your home, living with tenants will probably feel foreign at first. Because of this, it’s important to pick the right tenants. If you’re eager to start bringing in additional income, don’t allow finances to cloud your judgment when it comes to applicants. Always run a background check on potential tenants and meet with them before they sign any papers.
2. Upgrade the interior.
Rentals have to stay competitive within the market. Dingy, outdated interiors won’t impress anyone. Fortunately, small changes can have a huge impact. A fresh coat of paint, clean carpets and windows, and simple, basic decor can work wonders. For bathrooms and kitchens, simply changing out the hardware can be a big improvement. If necessary, consider investing in new appliances like dishwashers, laundry units, and refrigerators.
3. Pick the right price.
Do plenty of research on local real estate trends before you list your rental. First, search comparable rentals to determine the best price range that will help you pay the mortgage and make a profit without overpricing your property. Keep in mind that at the end of the day, your mortgage is being somewhat funded by your rental, so it’s a financial win…no matter what.
4. Be aware of the law, and follow it.
It’s illegal to rent out your home without documentation. And, to protect your finances and assets, it’s important to draw up a formal lease. It doesn’t hurt to have an attorney or two look over the contract. If you don’t have any friends in the legal field, consult an accountant to determine the tax codes for your rental.