Whether you’re looking to earn extra income, own multiple properties in need of tenants, or plan to spend a considerable amount of time traveling, renting out your home is an attractive option. But before you jump into the position of landlord, here are 5 things you need to know:


Establish your Rental Cost

 

While there are no laws governing rental costs (unless your property is rent controlled), you want to offer an attractive rental price per month without undervaluing yourself. Remember to review which utilities and extra costs — such as gardening or trash — you wish to include in the total rental cost (if any) and adjust the monthly price accordingly. If you do not wish to cover any utilities or extra costs, give your tenants the information regarding the various utility companies you suggest (i.e. which internet provider is fastest, which trash company services your area, and point them in the direction of the proper electric company). 

 

To avoid a stale listing, we encourage you to reach out to a local leasing agent to help you determine the right rental cost by conducting a proper CMA (Comparative Market Analysis) report, determine whether your property is free market or rent controlled, and provide any additional guidance you may need. Keep in mind that property laws and regulations vary not only by city, but specific neighborhoods as well. For example, while Santa Monica and Beverly Hills are both within Los Angeles County, their rent stabilization laws could differ; that said, be sure to choose an agent well-versed in your neighborhood property laws. 

 

Screen Your Potential Tenants 

 

If you’ve ever rented an apartment or home, you are probably already familiar with the extensive background check conducted for every tenant. To allow another person to live in your home takes a considerable amount of trust and assurance that shouldn’t be left to chance. Before drafting the lease agreement, review and verify your potential tenant’s current employment and salary; then request professional references to ensure a kind and respectful tenant — and one who will pay rent on time. 

 

After collecting your tenant’s bank statements, pay stubs, and tax returns, be sure to cross reference the documents to ensure validity. Furthermore, we highly encourage you to run their credit check independently to avoid fraud — you can never be too careful!

 

To guarantee accuracy throughout this tedious process, we suggest that you hire a professional with prior experience and fluency in Fair Housing laws in your state. 

 

Draft Your Lease Agreement 

 

An absolutely essential step, your lease agreement is meant to provide clarity and protect you and your property. Important points to cover in your leasing agreement include:

  • Any rules you wish to enforce for your property such as tenant illegal restrictions

  • Clarity surrounding your legal right to enter the property under certain circumstances such as repairs as well as the amount of time you will give an advance notice

  • The specified amount of rent, the due date, the accepted forms of payment, any late fees or check bounce fees, and whether or not you allow for a grace period

  • Deposits and fees such as security deposits and pet fees 

  • Any repairs and maintenance you expect from your tenant due to neglect and directions to reach you if a repair is needed 

  • Clarity surrounding who is responsible for maintaining appliances and servicing plumbing issues — especially if misused

  • If applicable, the landscaping schedule and whether or not the tenant is responsible for providing access 

  • The names of all tenants 

  • Specify that the rental property is the residence of only those who signed the lease and minor children if applicable 

  • State whether this agreement is a rental (renews month to month) or a fixed-term lease, typically lasting a year

 

Prepare Your Property for Move-In

 

Is your property move-in ready? To avoid any immediate calls from your new tenant regarding a broken heating system, a faulty smoke detector, a leak under the sink, or clogged toilets, ask your real estate agent to make sure your property is ready for immediate move-in. During this process, consider your agent to be your second set of eyes — catching any overlooked items and ensuring that your property is up to the current standards in the rental market. 

 

Right before handing the keys over to your new tenants, your real estate agent will also need to conduct a move-in inspection. Using customized forms and photos, the condition of each room will be detailed with close attention paid to windows, screens, light fixtures, closets, walls, floors, baseboards, doors, and door knobs. When the lease ends, this documentation protects you from being held responsible to repair any damage done to the property and helps to process the security deposit refund without any delays. Be sure to save the initial report and photos in an easily accessible place in case you need to prove any damages during the rental term. 

 

Advertise Your Property

 

While you are more than welcome to independently handle the advertisements and property showings, consider leaving it to the professionals. Through professional photos and detailed descriptions of the property, your real estate agent will be able to make your property stand out and successfully acquire leads — often in less time. Additionally, ensure that your agent has a proven track record of responding to inquiries with promptness. If an inquiry is not addressed within minutes, you risk losing a potential tenant. 

 

Consider Purchasing Rental Insurance

 

As previously mentioned, renting out your home takes a considerable amount of trust; however, just with every other investment in life, insurance guarantees that you are always protected. After reviewing your homeowners insurance, determine whether or not you need additional landlord’s insurance. 

 

You may also consider injury liability insurance, a standard offering in most landlord insurance policies. If a tenant is injured on your property, liability insurance helps pay for the resulting expenses if you’re held responsible. 

 

To protect their income, many landlords also secure rent default insurance in the event the tenant doesn't pay rent and you may need to issue an eviction, which brings us to our next point…

 

If an Eviction is Necessary 

 

Every landlord’s nightmare: you have to evict your tenant. To avoid a potential ongoing legal battle — or to ensure favor in court — handle your eviction notice in the most legal and sensible way by undergoing a formal eviction process. Common rules include giving notice and ample time (3 days) for your tenant to either pay their owed amount or move out as well as proof that your tenant has acted against the terms outlined in your legally binding lease agreement. Consult your lawyer to ensure a smooth and respectful eviction process.

 

Making the jump from homeowner to landlord can be intimidating, but with clarity and proper guidance, you will establish a steady income in no time. 

 

If you have any questions, concerns, or would like to receive more information about leasing your home and working with an experienced leasing expert, reach out to Chana Gedy Real Estate for a free 15 minute consultation.

 

Specializing in CMA (Comparative Market Analysis) and exceptionally skilled at pricing a property to rent, Gedy will go out of her way to make sure your property is ready to rent. Availability, responsiveness, and promptness are paramount in today’s market; with that being said, she will always be present to respond to inquiries and show the home to prospective renters. 

 

Gedy knows how to successfully screen tenants and find the best possible matches for high-end properties. Through her thorough experience with negotiating prices, move-in dates, and all aspects of a lease, Gedy leaves no stone unturned and thinks outside of the box in order to get the best deal.