Renting out your home can turn out be a traumatic experience if not done correctly, so here are some pointers on how to go about it.
- Know your tenant(s) Always verify the antecedents of your tenant, and this includes both credit history as a criminal background check. You don’t want a tenant who can’t make the rent, and you definitely don’t want a known drug dealer using your premises for illegal activity, even if the rent they are offering to pay is too good to pass up. Even if your prospective tenant is not a criminal, check if there are any noise complaints against his/her name (try DoNotRentTo.com or BadTenantsList.net) – somebody who plays the music out loud and/or hosts parties where the guests inconvenience the neighbors might not go down well with the local residents.
- Ensure everything is mentioned in writing: The lease is a very important legal document that specifies when the monthly rent is due, whether you have the right to inspect your property during the period of the tenancy, and if yes, how much in advance a notice is to be given in this regard, who pays for damages, whether the tenant can install additional electrical fixtures or carry out structural modifications, how the security deposit is to be refunded (minus cost of repairs or that plus painting charges) et al.
Also make sure everything is in full compliance with the law – in some states, it is the responsibility of the landlord to carry out repairs, and any clause in the contract stating that the tenant has to do it at his expense may expose you to an lawsuit. Even fighting a case in court is not cheap, given how much lawyers charge these days. Try this landlord and tenant law resource for USA. For Canadian provinces, there are plenty of resources online like this page for landlord and tenant information in Alberta.
- Repair: If it is your responsibility to effect repairs, do so without delay. This will only improve your relationship with the tenant, and make him/her less lethargic when it comes to paying the rent. Keep in mind that there is a major pitfall associated with delaying the process – if the tenant gets injured, he/she could sue you and that might turn out to be more expensive. Even if it is non-lethal or incapable of causing injuries, a broken door or window might let burglars in and your tenant might still sue you for not fixing it on time. If you have employed a manager to oversee the property, make sure he does his job thoroughly, leaving no cause for complaint. If you do not have a property manager, and cannot do repairs yourself, search for a handyman here.
- Make a full disclosure: If there are inherent environmental hazards, such as lead in the paint used on the walls, ensure that any prospective tenant is informed of this before he/she signs the lease. You could be held legally responsible for not doing so if your tenant develops medical problems on account of exposure to lead. Any structural weakness in the building too ought to be communicated well in advance.
- Protect yourself: There are now property insurance packages that cover you against damage caused by fire and storms, so you don’t have to be left worrying about how to honor the remainder of your rental agreement if something untoward happens. Some insurers cover the property against burglary and vandalism, and you might be able to pass the benefit on to your tenant. There is also liability insurance to protect you from lawsuits brought about by tenants in case of injuries.
- Be a friend: Irrespective of whatever dispute or disagreement your tenant may have with you regarding the property, it is always best to meet him/her in person and try to reconcile your differences amicably. If that does not lead to an understanding, you could attempt to arrive at a mutual settlement via a third party or a mediator. You should always keep lawyers and lawsuits out of your relationship with the tenant as that can only be counterproductive in the long run.