Finding Tenants for Your Newly Purchased Home
Investing in Rental Properties
Investing in rental properties include buying rental homes - collecting monthly rents and waiting for appreciation, buying commercial properties - leasing it to shops, restaurants etc, buying apartment complex - leasing to tenants and collect monthly rental bills. The choice depends on the individuals and their level of risk and comfort. Some of the benefits of investing in rental properties include Cash flow, Appreciation, Leverage, Control and financial freedom, Passive income, Capital Gains, Tax breaks, Depreciation etc.
Preparing the Property
Deep clean your home
Deep cleaning your home before open house is very important as it might give a fresh look and a fresh scent and may make the house look more appealing. You may also consider hiring a cleaning service especially to clean all the windows. Preparing and cleaning the entry way may give a great first impression about your home.
If it is a single family home or any home with a lot of space on outdoors that you are planning to rent out, landscaping increases the curb appeal. Mowing the grass and pruning the trees and shrubs gives it a healthier look and makes it attractive. Make sure to clean out any debris in the outdoor spaces and keep the entry and walkway clear to make the home warm and welcoming.
Heat, Plumbing or Electrical issues and Appliances
It is important to make sure all the utilities and appliances are in good working condition. Look out for flickering lights in the home. If there is a flickering light in a single fixture, it might be due to a loose connection, but if the flickering lights are found in multiple rooms, there might be an issue in the circuits which may need to be taken care off immediately.
Paint and repair damages
Painting the home in neutral color rather than bold colors not only brightens up the property but also helps the tenants to visualize the home decor preferences according to their taste. It is important to patch up any damages or discolorations on the wall as it brightens up the room and makes the place more appealing. A fresh coat of paint can go a long way in increasing the overall appearance and feel of the property.
Wash out windows and replace torn screens
Washing the windows and repairing any torn or broken screen can make the home look clean and well maintained.
Make a List of Necessary Maintenance Repairs
Keeping a preventative maintenance checklist not only helps to maintain the property in top shape but also helps in avoiding major repairs.
Check for water leakage or damage
Clean the gutters
Change air filters regularly
Test smoke and Carbon monoxide detectors
Maintain common areas of the home
Advertising your property
Here are some of the options you may use to advertise your property. Regardless of the type of advertising on online or paper, some of the important details to be included are Property description, photos of good quality, square feet, number of bedrooms and bathrooms, Rental amount, date from which the property is available, Contact information.
There are a number of rental sites available where the Landlords can advertise their property for rental. Usually, these websites help the tenants to filter their searches based on the location, square foot, rental price, number of bedrooms and bathrooms.
Zillow Rental Manager allows the Landlord to post an ad for their rental property along with the rental application for the tenants. It also provides a rental lease agreement creator which has a number of templates drafted from local law firms. It also helps facilitating rental payment collection and the ads posted in Zillow rental manager auto populates in sites like Trulia and Hotpads.
Craiglist allows Landlords to post their rental advertisement by creating an account.
Avail is a website that provides a number of tools for the Landlords. It helps in the rental listings, rental applications, tenant screening, lease agreement and online rental payment collection and rental maintenance tracker. It also auto populates the ad in Realtor.com.
Social media such as Facebook, Instagram, Twitter are used by majority of the people on a daily basis. The rentals can be advertised by posting the photos with the description of the rental property.
If you have your own personal website with a good traffic, then you may post photos, description, details and conditions of the property.
Newspaper is also a good option when it comes to advertising your property as it is not only cheap but also helps increase the exposure of the property. The ads in the newspaper are usually very small, so it is important to make the ad stand out by choosing catchy lines. It is also important to place the ad on high traffic days like weekends.
Benefits of using a Realtor
You may also pass on the responsibility to a realtor, as the realtor has access to MLS (Multiple Listing Service). Posting an ad in MLS auto populates the ad in a number of websites increasing the exposure of the property exponentially, some agents also conduct open houses to advertise the property. Realtors also have a large database or network which makes marketing the property very efficient. They may also help in pricing the rental property by determining the market value of the rental property by using other comparable properties. They may also help in drafting a lease agreement .
Distributing flyers in the areas of local community and neighborhood where the property is located, local grocery stores, community centers increases the exposure of the property. Using an attractive description and colored photographs of the property helps grab the attention of the people.
Rental Pre-screening questions
It is very important and advisable to screen the tenants who are interested in renting the property. It is important to be aware of the Fair Housing Act and maintain same qualifying standards with all the tenants to avoid being accused of discrimination. The first contact with the tenant usually occurs through phone or an email and it is important to collect some basic information during pre-screening and they are as follows.
Names of the members moving in the home
How many people will be living in the unit?
Contact information of all the members
The reason for moving
When are they planning to move in?
What is your monthly income?
Do they have any pets?
Smoking habits of the occupants
How long have they lived in their current home?
Pre-screening tenants helps filtering out the tenants that best fit for your property and the filtered out tenants may be given a rental application where they can be screened further for any criminal or credit reports.
Rental Application and Screening
Usually there will be a small non refundable application fee charged to the tenant. The most commonly requested documents include Driver's License, Contact information (Phone number and E-mail address), Proof of income like W2s, pay stubs or bank statements. Sometimes in a competitive renter's market, a letter of recommendation from the previous landlord or an employer may increase the chance of application getting approved by the landlord.
Landlords verify the tenant's employment or income to make sure that the tenant is capable of paying the monthly rent. Some landlords have certain rent to income ratio criteria to be met to approve the tenant's application.
Landlords usually check the credit history and credit score to make sure the tenant is capable of paying the monthly rent on time as it reveals any delay or failure of rental or any other bills that are not paid in time.
Background check helps investigate a tenant's character as it reveals any history of criminal conviction or felony that the tenant had. The time taken for the screening process may vary.
Signing a Lease agreement
Once the tenant is approved, a rental lease agreement is signed. Lease agreement is a legally binding document between a Landlord and Tenant where both agree to the terms and conditions outlined in the agreement. It is best to ask the renters to show a proof of Renter's Insurance before moving in to the home. The policy may be dated to the move in date so that the insurance coverage starts from the move in date. Most of the Landlords request a security deposit of one month's rent in advance while signing a lease agreement. The security deposit might help protect the Landlord and serve as a coverage from any loss caused by the tenant breaking or violating any terms of the agreement.