Although the real estate market is beginning to improve, it is still difficult to sell a house in many areas and is a reason many sellers are turning to leasing their home. Buyers that would have once qualified for a loan are being denied, and sellers are unable to sell or not willing to reduce their price to accomodate a soft real estate market. Leasing your house is an alternative but can prove harder than it seems. If leasing your home is an option, learning some of the steps can make managing your property a winning solution.
First, consider whether leasing is truly the right option for you. If you live in a Houston neighborhood with a homeowner's association, check the by-laws regarding leasing. Also, take a critical look at your house: if it's older or needing frequent repairs, leasing might be an endless headache for your and your tenants. And, if you still owe a considerable amount on the mortgage, think twice before leasing. You should have in savings at least 6 months' worth of housing expenses; if you're relying on the money from your tenant to pay your mortgage and they fall behind, you could be in danger of losing your house.
Assuming your home is in good condition, with a low balance on your home loan, and you have now decided to rent your house until the economy is better or to make extra money. Managing your home can be like having another job - and extra time and efforts will be required if you want to have a successful transaction.
Getting it prepared - Having the house clean and in good working repair will help get better tenants. Although, removing costly fixtures or furniture (if the house is furnshed) is recommended if you do not want them damaged.
Determine your price - Establishing your lease price is not as easy as adding up your monthly expenses plus a couple hundred dollars; it is important to be competitive as well. Review MLS listings to find out what similar homes are renting for in your neighborhood.
Check applicant backgrounds - It can be tricky, but you should always get a credit report and background check on potential tenants. The most pleasant people can have a checkered past with a criminal history or bad credit. Remember, leasing your house is a business transaction and it needs to be handled like one. Do not just accept the information the prospective renter provides you and, instead, get a credit report on them and prior landlord references.
Determine before hand what credit and background problems are not acceptable, and use this decision for everyone regardless of how nice they may seem. If you do not do the same thing with everyone then it could be a violation of the fair housing laws. If you decline an application, make a record of it and keep it on file in case there are any problems in the future.
Write up the contract - Again, this can be a difficult area. Obviously, a rental contract is a legal document and should be written carefully. There are many boilerplate documents available online, but according to nolo.com, the most important items to include are: the names of all tenants, limits on who can occupy the property, the term (length) of the tenancy, when rent is due and how it should be paid, amounts of deposits and fees, responsibilities regarding repairs and maintenance, restrictions on illegal activity, pet policy, and any other restrictions in line with state law or homeowners' association rules.
Maintenance - One of the major downsides to leasing is that you are ultimately responsible for most repairs and maintenance the house should need - and that includes on weekends and during vacation. Even if you plan on doing much of the maintenance yourself, it's a good idea to form a relationship with a good all-around handyman who can take care of things when you can't.
Decide on professional help - If you want or need to rent your home, but don't have the willingness to be a landlord, property managers can help. For a percentage of the rental income, a property manager can handle routine maintenance and repairs and make sure rent is collected - which is very important if you do not live in town.
Or, if you just some help with listing, advertising and screening applicants, consider a real estate professional. Generally, real estate professionals can help with listing your home, background checks on applicants, and proper lease contracts. Their fees can range from a couple of hundred dollars to a month's rent, though many landlords like the peace of mind and believe it is worth the money.
First, consider whether leasing is truly the right option for you. If you live in a Houston neighborhood with a homeowner's association, check the by-laws regarding leasing. Also, take a critical look at your house: if it's older or needing frequent repairs, leasing might be an endless headache for your and your tenants. And, if you still owe a considerable amount on the mortgage, think twice before leasing. You should have in savings at least 6 months' worth of housing expenses; if you're relying on the money from your tenant to pay your mortgage and they fall behind, you could be in danger of losing your house.
Assuming your home is in good condition, with a low balance on your home loan, and you have now decided to rent your house until the economy is better or to make extra money. Managing your home can be like having another job - and extra time and efforts will be required if you want to have a successful transaction.
Getting it prepared - Having the house clean and in good working repair will help get better tenants. Although, removing costly fixtures or furniture (if the house is furnshed) is recommended if you do not want them damaged.
Determine your price - Establishing your lease price is not as easy as adding up your monthly expenses plus a couple hundred dollars; it is important to be competitive as well. Review MLS listings to find out what similar homes are renting for in your neighborhood.
Check applicant backgrounds - It can be tricky, but you should always get a credit report and background check on potential tenants. The most pleasant people can have a checkered past with a criminal history or bad credit. Remember, leasing your house is a business transaction and it needs to be handled like one. Do not just accept the information the prospective renter provides you and, instead, get a credit report on them and prior landlord references.
Determine before hand what credit and background problems are not acceptable, and use this decision for everyone regardless of how nice they may seem. If you do not do the same thing with everyone then it could be a violation of the fair housing laws. If you decline an application, make a record of it and keep it on file in case there are any problems in the future.
Write up the contract - Again, this can be a difficult area. Obviously, a rental contract is a legal document and should be written carefully. There are many boilerplate documents available online, but according to nolo.com, the most important items to include are: the names of all tenants, limits on who can occupy the property, the term (length) of the tenancy, when rent is due and how it should be paid, amounts of deposits and fees, responsibilities regarding repairs and maintenance, restrictions on illegal activity, pet policy, and any other restrictions in line with state law or homeowners' association rules.
Maintenance - One of the major downsides to leasing is that you are ultimately responsible for most repairs and maintenance the house should need - and that includes on weekends and during vacation. Even if you plan on doing much of the maintenance yourself, it's a good idea to form a relationship with a good all-around handyman who can take care of things when you can't.
Decide on professional help - If you want or need to rent your home, but don't have the willingness to be a landlord, property managers can help. For a percentage of the rental income, a property manager can handle routine maintenance and repairs and make sure rent is collected - which is very important if you do not live in town.
Or, if you just some help with listing, advertising and screening applicants, consider a real estate professional. Generally, real estate professionals can help with listing your home, background checks on applicants, and proper lease contracts. Their fees can range from a couple of hundred dollars to a month's rent, though many landlords like the peace of mind and believe it is worth the money.
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