It’s time to start making some money out of your home! You might be thinking about renting it out for the first time, or maybe you’ve been doing it for years. Either way, there are a few things you need to do before you can start attracting tenants.
Take Out Insurance
A homeowner’s insurance policy isn’t enough if your home serves as a rental property. This is why it’s important to arm yourself with an insurance policy designed for landlords. Landlord insurance combines property and liability insurance into one comprehensive coverage plan, protecting you from potential losses and expenses related to damage from fire, lightning, windstorm or hail, vandalism or malicious mischief (including theft), water damage from plumbing leaks or burst pipes, falling objects and other perils.
Landlord policies also cover injury to occupants and loss of use or occupancy-related expenses, and rent paid out of pocket by you while repairs are made. The cost of repairing or replacing the structure after a covered loss is also typically covered by landlord insurance. And many policies provide additional coverage for personal property belonging to tenants, including furniture, appliances, and even personal items like clothing and jewelry.
Landlords can add optional coverage options such as additional living expenses if they need temporary housing while their building is being repaired after a covered loss; loss of rent if tenants are forced to move out because their apartment became uninhabitable due to damage from a covered peril; replacement value coverage on tenant belongings instead of actual cash value; liability protection for injuries suffered by tenants.
Get the Required Permits
Many municipalities require a permit for residential properties to operate as a rental, and you’ll want to make sure you have the right permits before you list your home with Airbnb. You can find out if your city requires a permit by contacting your local government.
If your area requires it, you’ll need to apply for the permit before listing your property on Airbnb. The application process varies from city to city and state to state. Generally, it involves providing information about yourself (the owner), the property, and any activities taking place at the property (such as renting). The permit will also include an expiration date, after which time you’ll need to renew it.
You may also need other licenses or permits depending on what kind of business activity will take place at your home. For instance, if there’s going to be an event hosted at your home that involves alcohol sales or entertainment performances, you might need a liquor license or entertainment license depending on the state in which you live.
Repairs and Upgrades
If you’re planning on doing repairs and upgrades to your home, it’s important to remember that you have to build those costs into your rental rates. Not only will this help you stay on top of the expenses, but it will also give tenants a good idea of what they’ll be paying for in their monthly rent.
If you don’t build these costs into your rental rates, it can be easy to forget about them. As a result, they may not get done at all—and then you’re left with an unfinished job that needs to be done! Plus, tenants will start getting frustrated and looking elsewhere for housing if this happens too often.
Make sure that you have a plan in place for how much money each repair or upgrade will cost—and how much it will add to your rent rate—before beginning any work on your home.
What Will You Charge?
Before you list your rental, it’s a good idea to sit down and determine what you feel is a fair price for your property. This will help you avoid pricing the property too high or low and losing potential renters.
To start, research similar properties that have recently been listed, sold, or rented. You can do this by searching online real estate websites and looking through local newspapers and magazines. Compare similar but not identical properties; for example, a two-bedroom condo close to downtown will probably rent for more than a two-bedroom condominium in the suburbs.
If you take an honest look at whether or not you’re indeed cut out to be a landlord, you’ll save yourself a lot of time and trouble. You don’t have to be a high-volume landlord with multiple properties; if you’re going to do it, do it right. After all, providing a great property in a great location doesn’t guarantee that your tenants will appreciate you or keep paying their rent on time. Instead, think about the actual costs involved, whether you can even afford to do this on your own, and how sound your business plan is from start to finish. If you think through these questions thoroughly and take the necessary precautions before renting out your first home, you’ll be able to avoid most of the pitfalls involved with being a landlord.