Renting a house without proper research can lead to several problems later. Therefore, consider some of the factors given below before you rent your house for a smooth procedure.
Most people will approve that renting out a home is a challenging task. However, if not dealt with properly, it can become a significant problem and create difficulties in the future. Common issues include:
- The tenant misuses the property or refuses to vacant.
- Late rent payment.
- Non-payment of supervision fees on time.
Before you choose to rent a residential property, be sure that you are not just concentrating on what is around the property and your access to factors like parks, public transportation, and schools but also on what is inside the rental house.
It is no fun to shift into a new place only to find that several little things are wrong with the space you now have to bother your landlord to fix. You can efficiently avoid duty for most rental issues by bringing them up when you and your owner do the move-in walkthrough.
8 Precautions to Take Before Renting a House
Here are some key aspects to consider before you rent your property for a hassle-free experience:
Do a Proper Background Check
While renting your house, you must ensure that the tenants are entitled to reside in it. For a proper background assessment, you can get data from their previous owner, friends, and place of employment.
To make sure your tenant is not implicated in any crimes, police verification is necessary before signing a rental pact. In addition, it safeguards the landlords by validating the renter’s identity. Police/tenant verification can be done offline and online and is a comparatively simple process to save yourself from an issue in the future.
Fix the Rent
It is an essential step towards renting your property. Before you fix the rent amount, do a proper market check about the existing trend.
Fixing it higher than the existing market prices would make it hard for you to find a renter. Or if you schedule to set it higher than the market price, ensure that you explain it by offering additional furnishings or any other premium services comprising social security devices or automation.
Check Property Ownership Documents
You must have the essential ownership documents to rent your house to avoid any kind of issues in the future. You can review and get property documents online by seeing the website for land details as per your state. Given below is the list of property documents one might need for a rental agreement:
- Title Deed
- Sale Deed
- Lease Deed
- Partition Deed
- Electricity Bill, Water Bill or Telephone Bill
- Gift Deed
- Revenue Record
- Property Tax Receipts
Rent, Tenancy, or Lease Agreement
A tenant and a landlord sign a rent agreement to start and manage a tenancy. You must formulate a proper rent agreement before you lease your house.
Rent agreements comprise data on the two parties, namely the tenant and the landlord, and the terms and events of the tenancy. Both parties must obey the rules summarised in the rental agreement.
The rental pact should contain the following:
- The tenant’s and landlord’s names and addresses
- The length of the tenancy
- The terms of the tenancy
- The amount of rent and security deposit
- Constraints on both parties
- The situation for discontinuing the agreement
- The conditions for renewing the agreement
- Who is accountable for charges such as maintenance fees, repairs, etc?
The agreement should also contain information on the property you are renting, like the size of the house, the floor or apartment number, the number of rooms, bathrooms, the kitchen, etc. If the home is furnished, note all the fittings, like sofas, beds, chairs, tables, air conditioners, wardrobes, fans, lighting, and woodwork.
Before renting your house, the lease agreement should also comprise the penalty in case of any harm by the tenant. The tenant damages clause must state that the tenant shall not entitle any damage to be committed anywhere in the building, property, or common areas.
The tenant shall give the property to the owner in the same situation as it existed on the commencement date, except for regular wear and tear. Renters shall bear the expense and expense of any repairs required to restore the situation of the premises before you lease your house.
Termination of Agreement
A rent pact is usually made for eleven months, followed by a two-month notice period for either party to terminate the pact. The termination clause in the rental agreement must cite the notice period.
The rent pact can be renewed with the tenant and landlord’s mutual approval. Terms and conditions for premature termination must also be cited. If tenants break any of these conditions, they must leave before the lease ends. It is significant to keep this clause in mind before renting your house.
Tenant Overstay Charges
While renting your house, remember that time is money, so you want to minimise the duration between tenants as much as possible. Managing various tenants and occupancies can be challenging. More time between tenants lessens your profits, and potential tenants may be suspicious of a property in the market for a long time.
Due to this, the rental pact should also include additional charges that can be asserted if the tenant does not leave the house on time.
If the renter fails to quit the premises within the period of the Rent Agreement, they have to pay twice the amount every month for the first two months and later four times the amount in the rest of the months.
No Commercial Use
Many renters use the rented residential property for commercial objectives to avoid high rents. For example, one can open a tuition centre or small office on a residential property. To prevent such a situation, an owner should make it clear in the rent pact and give the house time-to-time stays.
Tips to Keep in Mind While Renting Your House
Understand the Duty Involved
First, you must assess whether being a landlord is a responsibility you can handle. The advantages of renting are multiple, such as the ability to prevent the vandalism that frequently plagues an empty home, the relief of tax breaks, and the ability to induce income that covers the bills and perhaps even creates a profit.
Nonetheless, being an owner is another obligation you will have to fit into your life, and it is safe to infer that things will sometimes go wrong to run smoothly. You will have to stay on top of maintenance and repairs, collect rent, dole out more for the homeowner’s insurance policy, and try to prevent wear and tear on your property by maintaining supervision of your tenant’s housekeeping abilities.
Notably, the IRS (Internal Revenue Service) generally requires that owners report rental income on their tax returns.
Nonetheless, the IRS has a Minimal Rental Use rule, which notes that if a dwelling unit is utilised as a residence, implying your home, and was rented for fewer than fifteen days, the rental income doesn’t have to be noted.
Even so, if leased for fewer than fifteen days, the landlord doesn’t get the tax advantages of deducting payments, such as utilities, which would generally lessen taxable income.
Prepare Your Home for Tenants
In a down market, you presumably would not be able to get away with leasing the home as-is. Renters are more cautious and picky at such times due to the increased availability of rental residences, and their anticipations are much higher.
Equip for the new renter by entirely cleaning your home and making sure devices are working and are in good condition. If you have determined that you are leasing an area or room within your house, make sure that you can ensure that area from the rest of your residence.
Marketing Your Home
Once the house has been cleaned up, develop a list depicting what makes it appealing so you can set it on the market. Take notice of desirable features like a dryer, washer, air conditioning, and garage. Use rental periods to help sell or rent out the property.
Post an advertisement for the property or home on reputable websites and local newspapers. Also, some real estate dealers will work with landlords to help rent out their residences, although the agent will take a commission if they give you a renter.
You can also lease a property management firm to deal with the legwork of leasing your house, but you will have to give money to them. The cost differs by company, but it is frequently between eight per cent to ten per cent of the monthly rent, and additional fees may be involved.
Hire Specialists to Help You Navigate the Financials
Turning your property or home into a residential rental property may appear like a simple task, but it is significant to talk with real estate lawyers and accountants to ensure you are abiding by tax laws, zoning ordinances, and local property laws.
You may allow for tax deductions, but knowing which expenditures are deductible is crucial. Plus, there are limitations on how much you can take away each year, and the amount you are allowed to deduct may vary from the rental activity noted on your tax return.
A lawyer can also enable you to navigate the landlord-tenant laws, which differ from state to state and assist you in understanding your community’s regulations governing rental houses. You can also take help formulating the lease, making sure that it pursues local laws.
Eventually, talking with a lawyer can help you specify reasonable house rules and emergency connections. Set the rent expense by understanding what other rental properties are going for in your community and neighbourhood. Remember that potential renters will be researching for deals, so set the rent at a competitive expenditure and emphasize all the most useful aspects of your home.
Almost everyone will agree that lending a house on rent is not simple. However, it could become a serious problem if not dealt with properly. The common issues include looking for new renters every few years, misuse of the property by the renter or his refusal to leave, delay in payment of rent, and maintenance fees on time. Therefore, you must follow the precautions above to avoid the nuisances later.
Renting out a house or property comprises marketing the property, doing the paperwork, and an obligation toward tenants. It also comes with certain challenges, such as searching for the right renter, keeping a tab on the harms and supervision, and ensuring there are no uncertainties in rent payments.
Apart from these, the owner should periodically visit the house or property to check whether the renter is violating any situation so he can demand that the tenant vacate the house. If the tenant refuses to leave; the owner can approach the authority which oversees conflicts related to leasing with all the documents.
What is the minimum duration needed to rent your house?
The Registration Act of 1908 needs the registration of a rent agreement if the rental length surpasses twelve months. However, most people sign a lease for eleven months to skip the registration procedure.
Who is accountable for maintaining the property?
While renting your house, the Rent Control Act makes it compulsory for the property landlord to keep the residential premises in adequate condition.
Can you leave a renter for not paying rent?
Yes, you can serve the tenant with an eviction note. To do so, a person in the court must file an eviction notice with jurisdiction over the property.
Is there any limit on the rent one can charge for a house?
Since no substantial legislation comprises an upper limit on rent amount, the owner can decide the payment they wish to charge before renting.
How can a person charge for a security deposit on a rented property?
As per The Model Tenancy Act, if you wish to rent the house, you can't demand more than the rent of two months as a security deposit, but for non-residential properties, you can ask for rent of six months.