8 Things I Wish I Knew Before Renting Out a Property for the First Time
Updated: 2 days ago
Before I started renting out properties, I had absolutely no idea what to expect. I knew I wanted to rent out my properties instead of selling them, but I was still totally unsure about how it all worked.
Here are 8 things that I wish I knew before starting to rent out my properties as a real estate investor.
1) Manage your emotions
No matter how many times you've rented out your home or vacant property before, there are bound to be some emotions that come along with it.
Whether it's nervousness about unknown renters potentially trashing your place, or frustration when they rent it out and then take their sweet time moving out, there's no getting around it: people who rent from you will impact you emotionally.
To help yourself stay level-headed and prevent any problems down the road, make sure to set up clear expectations about how things work in your contract (which we'll cover shortly).
You don't want a happy tenant becoming angry because she didn't know that pets aren't allowed in your building—or vice versa.
2) Know your industry
The property industry is vast and varied, so it’s worth doing your research before picking an area to invest in. If you’re looking at single-family houses or small apartment blocks, you may want to consider buying in an area that needs repairs but has a lot of potential.
It might take time and effort to fix up, but getting into real estate at its most basic level can be more affordable than some more popular areas.
Make sure you also have your eye on community trends: Are there plans for new transportation routes nearby? Are schools in good condition? Is there a new mall coming soon? All of these factors could affect rent prices within years.
Ideally, they’ll increase rather than decrease—but there are always considerations when investing in any market.
3) Understand your market
One of the biggest mistakes that landlords make is getting attached to their property. You need to realize that property is an investment, not your second home.
Even if you want to, you can’t live in multiple locations at once, so be careful with how attached you get.
If you feel your emotions are taking over and making your decisions irrational, it’s probably time to consult with a real estate agent or broker.
Don’t forget that there are different markets across states—and within states as well—so even if you’re just renting out one property, looking at prices in surrounding areas could help determine what rent price would be more beneficial for both parties involved.
The more research and understanding you have about your market ,the better off you'll be!
4) Familiarize yourself with laws
The housing laws in your area could have significant implications on your ability to rent out property.
For example, if you are found to be renting out an unlicensed rental unit, you could face steep fines and other penalties.
Remember, ignorance of the law is no excuse. Start learning about local housing codes early so that you aren’t hit with any surprise fines or penalties during your investment’s first year of operation.
Be sure to check that renters can legally occupy units in areas where you plan to rent out homes—both neighborhoods as well as specific buildings within those neighborhoods.
Landlords who break zoning laws may find themselves being told they must return tenants' security deposits (or pay additional damages) because they were leasing illegally-occupied properties.
Be smart when choosing locations and make sure units will comply with state/local/municipal regulations before accepting tenants.
Also, look into whether you need licenses for your rental business -- like a real estate broker's license -- depending on what state you live in. You don't want issues popping up after taking money from potential renters!
5) Find a tenant you can trust
The key to renting out your property is getting a good tenant—someone who will treat your property like their own. Finding one you can trust may be difficult and can take time, but it’s worth it in the long run.
Having someone trustworthy reduces risk and gives you peace of mind while allowing you to focus on growing your business.
Once you've identified someone, ask them how they’d handle certain situations or what they would do in specific scenarios.
Make sure they have references available as well; not only is that going to provide some comfort, but it also shows that people are willing to go on record saying positive things about them!
6) Get the right insurance coverage
If you’re going to rent out your property, you’ll need to make sure it’s adequately insured. Getting that right can be complicated, so don’t hesitate to bring in an expert who can help guide you.
Otherwise, there are things like renter’s insurance or umbrella coverage that cover things like tenant theft or injury.
You should also look into covering damage caused by floods and other disasters. Most important of all: Make sure that it covers events both in and outside of your home—you may have guests who injure themselves at an event hosted by someone renting from you!
7) Hire reliable contractors
Finding trustworthy, reliable contractors can be difficult. Contractors may be tempted to cut corners or perform shoddy work if you aren’t there to supervise them, meaning that when you move in, your house could need repairs—potentially costing you more than your initial investment.
For large renovations and building projects, consider using contractors who have been recommended by friends or family members who’ve used their services before (and will vouch for their quality).
The internet is also a great resource for finding contractors; online review sites like Yelp are a good place to start your search.
You can also do an online search by typing keywords such as general contractor in [your city] into Google.
8) Ask questions, get answers
If you’re renting out your home, or simply curious about what it might be like to do so, ask any potential tenants as many questions as possible.
You’ll want to ask about their job and income details—including what kind of work they do and how long they’ve been employed at that company.
Also, it’s always good to get an idea of what kind of people you might be dealing with. After all, no one wants to end up with a deadbeat who never pays rent on time and throws wild parties every night. (Note: if your prospective tenant doesn't have enough cash for first month's rent plus security deposit, politely decline).
Renting Out a Property for the First Time - The Bottom Line
Make sure to run all numbers through your head before you commit to renting out your property. There are several costs associated with renting, not just what you may think of as rent.
Think about upkeep, insurance and other fees associated with owning an investment property. Getting these numbers in line before offering your space will save you time and money down the road.