5 Your Tenants
Before you have prospective tenants sign on the dotted line and you hand over the keys, carefully screen them and all the adults (anyone 18 and over) who will live in the home. It’s common for a landlord to run background and credit checks, as well as request references. If a prospective tenant or anyone else who wants to live in the home refuses to give you permission to run a background and credit check, this is a good sign that you should deny the rental application.
4 Mortgage and Insurance Implications
When you rent out a home, you’re not technically a homeowner. Therefore, you need to let your mortgage company know that the home is no longer your primary dwelling so they can give you permission to rent it out to another person, according to “U.S. News & World Report.” You’ll also need to change the type of insurance on the house from homeowner’s or “fire” insurance to a policy designed for landlords. This type of insurance covers the home and your property in the event of a disaster, but it won’t cover your tenant’s personal property.
3 Your Legal Responsibilities
Before you become a landlord, review the Fair Housing Act, which does not allow discrimination when screening prospective tenants, setting rental terms or evicting a tenant based on color, race, national origin, familial status, a disability, sexual orientation or gender. In most states, you are obligated as a property manager to make repairs that a tenant requests if the current condition poses a hazard. However, you may have the right to deny requests to make cosmetic changes or to charge a tenant for damage that he caused to the home, like a hole in the wall. As a landlord, you’ll also have new responsibilities when it comes to paying taxes.
2 State Tenant Laws
In some states, laws tend to favor tenants. Is yours one of them? Mint.com shares that some states require you to give tenants a 90-day eviction notice, even if they haven’t paid the rent in as many days or there’s major damage to the home. In other states, you may be responsible if the tenants steal cable or other utilities. Furthermore, if you don’t word your rental contract just right, tenants may be allowed to take (ahem, legally steal) some of your property like small appliances, when they move.
1 Your Plans
Renting a home is like owning a business. In addition to outlining business goals for your rental endeavor, you also have to consider your plans. Do you plan to rent out the house for only a couple of years? Are you trying to sell the house, but are renting it out in the meantime? When you know your plans, you can better determine if renting out the home is in your best interests and the interests of your future tenants.