Before deciding to rent a property, it is important to research state laws. Did you know that state laws may dictate what you can charge for appraisal fees, application fees, late fees, security deposits, and holding deposits? For example, as of 2011, a landlord can only charge up to $42.41 in appraisal/application fees and a landlord cannot require more than 2 months rent for a security deposit on an unfurnished property. There are also strict guidelines when it comes to evictions. It is crucial to know the rules before starting the process.
Managing a rental property can be a lot of work. If you’d rather be less hands-on, you can hire a professional management company to handle responsibilities you’d rather not handle. This can normally cost up to 10% of the monthly rent collected. Many management companies will advertise new tenants, collect rent, handle maintenance repairs, handle legal notices, and help with evictions. Make sure you know exactly what services will be provided and whether they are insured and have errors and omissions insurance.
If you decide to manage your own rental property, check out the current rents in your area. At what price are they renting? What is this landlord’s offer? What is the condition of the property? It is very important to know your competition. Price your property close to the going rate. A rental that is too expensive can inadvertently stay for weeks. The longer you sit, the more money you lose.
Start the advertising process immediately. There are many free ways to advertise. Social media and Craigslist are free and easy to use. Purchase a large rental sign and keep it posted on the property with a good contact number at all times. Host open houses and keep your hours flexible. If a good potential tenant is ready to see the house and their availability is low, they will move on to the next property.
Carefully screen potential tenants. Ask all potential applicants to complete a rental application and run their credit report. You can request an evaluation fee that can be used to complete this process. Remember, you are not allowed to discriminate on the basis of race, gender or religion. However, you can choose not to rent to anyone with a previous eviction or a history of not making payments on time.
Always ask for a security deposit. This will protect you once the tenant moves out. If any damage has been caused by the tenant, it can be used to repair the property. Most landlords also require the first month’s rent. Remember to collect a refundable holding deposit if you are asked to delay the move-in date when the tenant is not available to move in right away. If the tenant decides during that time that they no longer want to rent the property, they can keep some or all of the holding deposit for lost rent or other costs. Otherwise, this fee must be refundable or applied to the first month’s rent.
A rental or lease agreement should always be signed to protect both the owner and the tenant. This contract will describe the terms and conditions of the lease that have been agreed upon. It may include whether pets are allowed, who will pay for utilities, what services will be provided, the amount of rent agreed upon, and deposits. At the time of foreclosure, the owner and tenant must complete and sign an inventory or move-in conditions checklist. This must be completed within the first 3 days. The property should be toured and its current status noted. Disagreements can be avoided when moving in simply by taking this little extra step.
There are some additional items that should be mentioned at this point. You should check with your insurance company to make sure you have homeowners insurance to protect you. You should have a list of contractors to recommend or call for repairs. Your tenant should know exactly when and where to call in an emergency. Communication is important to maintaining a great landlord/tenant relationship. Many landlords are happy with their tenants and have few problems.
If you are faced with a situation where an eviction is unavoidable, the process can be complicated. Once you have given the tenant the required notice and they do not move out of the property, you can begin the eviction process by filing an unlawful detainer. In most cases, a judge will hear and decide the case within 30 days after it is filed. He must use court procedures and absolutely cannot start to carry out the eviction on his own. If the court decides in your favor, they will issue a writ of possession that will allow the bailiff to remove the tenant from the property. The tenant will have five days from the notification of the deed to leave. If the tenant decides not to leave, the bailiff will physically remove the tenant and lock the tenant out.