How To Lease Your Home
Hanna KielarNovember 15, 2019
There are a number of reasons why you might be looking to lease your own home. Maybe you received a job offer and you’ll need to relocate. Or maybe you’ve decided to purchase a new home and want to turn your existing house into a rental property.
Leasing your home can be a great way to continue building equity. It can also help you increase your rental income each month. But before you start drafting the home lease agreement, you need to decide if this is the best move for you.
Can I Lease Out My House?
Before you get overly excited about this new endeavor, you need to consider if leasing out your house is even an option. If your home is in a neighborhood controlled by an association, check the by-laws to see if there is anything included about rentals. Some associations don’t allow rentals at all and some set limits on the number of homes being rented at one time.
You also need to decide whether becoming a landlord is something you’re ready to take on. Many people think of real estate as being a passive income opportunity. While at times it can be, there’s still a lot to manage. You’ll be in charge of finding tenants and running background checks. You’ll also need to keep up on maintenance of the home.
What Should I Know Before Renting My House?
Once you’ve decided that you want to lease your own, you need to make sure you’re prepared. Before you start looking for tenants, there are a few things that need to be done.
1. Get Your Home Ready For Renters
If you want to attract renters, you need to make sure your home welcoming. Simple things like sprucing up the curb appeal or repainting the interior can go a long way. You can also consider other upgrades like new appliances. These types of things will not only attract renters, but can also help you get the most rental income possible.
2. Modify Your Insurance Policy
Once you change the home from being your primary residence to a rental property, you’ll need different insurance. Make sure you talk to your insurance agent about the best policy for your situation.
3. Make A Plan For Emergencies
Planning for emergencies is crucial when you become a landlord. It could be something as simple as a leaky kitchen faucet or you could have a tenant leave unexpectedly. There’s a financial risk for emergencies both big and small. By setting up an emergency reserve, you’ll be in a better position if something were to happen.
4. Be Thorough When Screening Tenants
Finding responsible tenants can be the difference between a positive and negative experience as a landlord. Once you’ve found a tenant who fits your criteria, ask them for references and do a thorough background check. This will help you understand the type of renter they might be.
How Much Can I Lease My Home For?
One of the most important parts of turning your home into a rental property is understanding how much you can charge for rent. There are a lot of variables that go into the decision. First, and probably most important, you need to look into the rental market in your neighborhood. How much are homes of a similar size renting for? One of the easiest ways would be to look for listings on a website like Hotpads.com. You can also speak with a real estate agent who might be able to give you some insight.
Once you know how much other homes are renting for, you need to understand why. Do they have an updated kitchen or bathroom? Do they have an extra-large yard? When deciding how much you can charge for rent, these are the items to consider. How does your home compare to others in your neighborhood?
How Do I Write A Lease Agreement?
Once you’ve found someone interested in renting your home, it’s time to put together a home lease agreement. This is the legally binding agreement between you (the landlord) and your tenant.
You’re probably wondering what you should include in your home lease agreement. It starts with all the basics, including the property address, the tenant’s information, the duration of the lease, and the security deposit and fees. There are also several clauses that should always be added. Some of the most important include:
● Severability - If it’s found that one part of the lease is illegal, this clause will still make the rest of the lease enforceable.
● Sub-leasing - It’s important to lay out your expectations for sub-leasing. Typically, there is a fee involved, plus it’s important to inform your tenants that any sublet will still go through the normal screening process.
● Default - This clause will state that either party can terminate the lease, with notice, if certain obligations are not met. This would include no-payment of rent or a violation of other rules that have been put in place.
● Use of Premise - This is important because it lays out what the home can be used for. For example, if a family of five moves in, it will state that those five people are allowed to live there. This prevents the home from being occupied by unapproved individuals.
Choosing to lease your home can be both an exciting and scary task. You’re moving on to a new chapter in your life all while taking on a new responsibility. However, by making sure you’re prepared for emergencies, finding the right tenants, and having a solid agreement, you’ll be set up to lease your own home with success.