Renting out your home can be a fantastic option for making passive income if done correctly. However, there are many things to consider before delving into renting out your home and obstacles you need to foresee and prepare for now. Renting out a house is an investment, and like all investments, it comes with a certain degree of risk.
Imagine it like lending your neighbor your lawnmower. When you do so, there’s always the possibility it comes back to you damaged or dirty. They can return it later than agreed upon or, in extreme cases, not at all. But, you’re lending it to them with the expectation that it’s returned in a timely manner in relatively the same state it was when you lent it to them. Why do you do this? Because you’re investing in your relationship with your neighbor. Lending them the mower now improves your neighborly reputation and increases the odds of them returning favors in the future.
Renting out your home does come with inherent risks. Just like lending your neighbor the mower, the home can be damaged, abandoned, stolen from, and so on. That’s why you need to know the best practices for preparing your home to rent. Below, the property management professionals at Minnix have laid out some of the key things you need to do once you make the decision to rent out your property.
Making Sure You’re Home is Qualified to Rent
There are a few things you have to check before you can even consider putting your house up for rent. These logistical items include making sure your mortgage is up to date and that your loan doesn’t contain any stipulations that prevent you from renting out your residence. For example, government-backed loans, such as FHA loans, often require homeowners to reside in the house for at least a year before renting it out. This is especially important if you’re buying a house with the exclusive intention to rent it out.
Prepare for the Obstacles
Another thing you’ll need to do before you can start the process of renting out your house is to make sure you’re prepared for it financially. As the owner of a rental property, there are several emergency expenses that are your responsibility. For example, pipe leaks, roof damage, and some appliance repairs are just a few of the things that could pop up and require immediate landlord attention. You should aim to have at least three months’ worth of savings for the rental home. These three months’ worth of savings should consider things like mortgage payments, utility bills, insurance, and general maintenance. This also helps prepare you for paying the general home expenses while the house is on the market.
Start Prepping the Home
Now that you’ve taken care of the preliminary admin duties involved with renting a home, it’s time to put in some labor or pay someone to do it. There are several steps in this process that we’ll break down below.
Clear it Out
The first step in physically preparing a home for rent is clearing it out. Part of this will be deciding if you want it furnished or unfurnished for future tenants. Furnishing your house allows you to charge more rent, reduce market time, and deduct furniture costs from taxes. However, this comes with additional costs upfront that may hinder your timeline. You’ll also have to deal with damages to the furniture and wear and tear over time, which can get costly very quickly.
On the other hand, an unfurnished house is less expensive up-front. You’ll also have fewer concerns about things being damaged in the home. It also has the potential benefit of longer-term tenants since they’ll have invested some of their own time and money into furnishing the house the way they like it. These benefits, of course, come with cons including longer time on the market, lower rent, and potential damage from tenants moving their own furniture in and out.
After you’ve weighed the pros and cons of furnishing your house and made your decision, clear it out. Any decorations that are personal to you, such as photos, have to go with you. You wouldn’t want to live in a home plastered with another family’s memories, so you shouldn’t expect the same of your tenants. You want to leave a neutral setting, furnished or unfurnished, for your tenants to make their own. You’ll also want to remove particularly valuable items and clear out storage spaces.
Repair and Replace
After you’ve cleared out the house, perform a detailed walkthrough. During this walkthrough, you’ll want to note every concern you see. This will include holes in the walls, mismatched paint, damage to the floors, signs of pests, leaks, doors, and windows not closing correctly, wearing weather stripping, and more. There are complete walkthrough sheets you can find online that will help guide you through everything you need to check, item by item. A detailed walkthrough will both allow you to identify items that you need to deal with immediately and give you a solid baseline to refer back to when assessing the residence after a tenant moves out.
Once you’ve finished the walkthrough, see to the items that require immediate attention. The more you can repair right away, the better, as it makes your house more attractive to well-qualified renters. You’ll also want to repair or replace old or nonfunctioning appliances as well as HVAC systems and other common home comfort items.
After you’ve decluttered, you’ll need to have the entire house cleaned. This is a step that’s often best left to professionals. You’ll need to clean carpets, windows, floors, ceilings, walls, railings, bathtubs, sinks, toilets — pretty much every inch of the home needs to be cleaned and sanitized. If you’re leaving furniture, make sure to deep clean those items as well.
Want to rent out your Texas property but feeling overwhelmed? We get it. That’s why the property management professionals at Minnix are ready to help. Contact our team today to learn the best approaches to renting out your Texas house!