5 Steps To Help You Start Renting Out Your Home
Many people ponder over the idea of renting out their homes. They may want so bad the benefit of an extra income to save money or clear a debt, or they may see it as an option to selling during a housing slump, a way to wait things out until the economy or home finance improve.
The motives are personal and many, but it’s quite possible for this plan to become more trouble than it’s worth when appropriate considerations and plans are not made.
Here are five steps that we compiled to get you going in the right direction:
- Research and Understand What is Involved
- Prepare Your Home for Possible Renters
- Marketing Your House For Rent
- Hire Professionals to Help You Navigate the Financials
- Screen Tenants Carefully
- Key take-aways
1. Research and Understand What is Involved
If you are lucky enough to live in a tourist-friendly area, like near the beach or a major city like Entebbe, renting out your home as a short-term or seasonal rental may be an option. Before you sign up with a short-term rental group, like Airbnb, find out the rules and regulations for these types of rentals in your town and city.
First, you must determine whether being a landlord is an obligation you can even handle. The benefits of renting are numerous, such as the ability to deter the expense of keeping an empty home looking good and the ability to generate income that covers the bills and possibly even creates a profit.
However, being a landlord is also one more responsibility you’ll need to fit into your life, and it’s safe to assume that things will sometimes fail to run smoothly. You’ll need to stay on top of repairs and maintenance, collect rent and try to avoid wear and tear on your property by keeping an eye on your tenant’s housekeeping skills.
2. Prepare Your Home for Possible Renters
In a down market, you probably won’t be able to get away with renting out the home as-is. Tenants are more attentive and choosy at such times, because of the increased availability of rental homes in Uganda, and their expectations are much higher.
Prepare for the new tenant by thoroughly cleaning your home and making sure appliances are working and are in good condition. If you’ve decided that you are renting out a room or area within your house, make sure that you can secure that area from the rest of your home.
3. Marketing Your House For Rent
Once the house has been straightened out, develop a list describing what makes it appealing so you can put it on the market. Take note of those commonly desirable features such as a washer and a dryer, air conditioning and garage. Use rental terms to help “sell” the property.
According to Burt Systems, an online marketing agency in Uganda, words and adjectives that’ll help you get a renter include: “self contained”, “bungalow”, “large compound”, “concrete ceilings”, “fenced”, “secure neighborhood”, and “tiled floors.” Be sure to use any and all of the terms that apply to your home.
Next, post an advertisement for the home on reputable websites like Nyumba-Online.com and in the local newspapers. In addition, some real estate agents will work with owners to help rent out their homes, although the agent will take a commission if he or she finds you a renter.
Investopedia recommends you hire a property management company to handle the legwork of renting out your house, but you will have to pay them. The cost varies by company but it is often between 8% to 10% of the monthly rent and there may be other fees involved.
4. Hire Professionals to Help You Navigate the Financials
Turning your home into a residential rental property may seem like a simple task, but it’s important to talk with real estate attorneys and accountants to make sure you are abiding by tax laws, and government property rules.
You may qualify for tax deductions, but it’s important to know which exact expenses are deductible. Plus, there are limits on how much you can deduct each year, and the amount you are able to deduct may differ with the rental activity reported on your tax return.
An attorney can also help you navigate the landlord-tenant regulations and help you understand your municipality’s rules governing rental properties. You can also seek help drafting the lease, making sure that it follows government laws. Finally, talking with an attorney can help you determine suitable house rules and emergency contacts.
Set the cost of the rent by learning what other rental properties are going for in your neighborhood and community. Remember, potential tenants will be scouting around for deals, so set the rent at a competitive price and make sure you highlight all the most valuable aspects of your home.
- The responsibilities of landlords are vast and can often come with unexpected costs. It helps to have some cash reserves, if possible.
- When screening a potential renter running a deep background check is advisable. Make sure to ask for multiple references from potential renters.
- Know your rights and the rights of your tenants—it’s a good idea to familiarize yourself with the Landlord an Tenant Bill 2018.
- If you have a home on a lake, near a beach, or close to another seasonal venue like Entebbe or Jinja, it may be worth it to investigate short-term rental platforms.
5. Screen Tenants Carefully
Start looking for a tenant as soon as your property is ready to be shown. Then, choose your tenant very, very carefully. You need to be able to depend on this person not only to pay the rent on time but also to keep your home in good condition. Also, if the person is someone you may be cohabiting with, learn their habits so you won’t run into any nasty surprises.
Don’t forget to gather references for potential tenants and check their credit histories or how they earn what they’ll be paying for rent. You should also take safety precautions when screening a tenant—after all, this person is a stranger. Once you’ve found the right tenant, ask for a reasonable security deposit and arrange an appropriate payment schedule.
Renting out a home can be beneficial for both owners and tenants, but only if you take the time to address and prevent potential pitfalls. After, all it’s still your house.