Tips to Rent Your Homes Out Quickly
B2R Finance Guest Post by Mark Ferguson, InvestFourMore.com
One of the most important parts of investing in long-term rentals is finding a great renter. There are many different ways to rent a home, I will break down exactly how I advertise and pick tenants, as well as how I write my leases. I will also go over how I personally determine the appropriate rent for the market.
How to determine rental rates
This step is one of the first things you do as a real estate investor. It is tricky to explain exactly how to determine market rental rates, because each market uses different techniques to rent homes. Some markets primarily use the MLS to rent homes, while other markets hardly use MLS at all. In Denver, Craigslist is the primary method to rent a home, and the best way to determine rental rates.
When I am trying to determine rental rates, the first thing I do is pull up properties for rent on Craigslist. I browse Craigslist to see what is in available in the neighborhoods that are most similar to my property, with the same amount of bedrooms and baths. I don’t look at the most expensive rentals, I look for homes in the lower end of the price range. Be careful, if you see an incredibly low-priced rental. I ignore any ads that seem way out of line with the other rentals.
Looking at ads on Craigslist is only the first step, these are just asking prices. To see what is actually renting, it takes a little more work. Print or write down the ads that are the most comparable to your property. Wait three days, and then check to see if the ads are still on Craigslist. If the advertisements are gone, those houses were probably rented. If they are still up, they probably have not rented. Check again in a week to see which ads are still there and which are gone. If you want to take one more step, call the numbers or email the ads that you first printed and ask if the properties are still available.
How to price a rental property
I have tried a couple of different methods of pricing my rentals.
- Price at the top of the market and try to find a renter who will pay a premium.
- Price a little below market and take my pick of great renters.
My experience has been much better with taking my pick of great renters. Even though the rent is lower, I usually have a lot less to worry about like late rent or excessive wear and tear. Whenever I price a rental unit high, I am waiting for a decent candidate to send an application in, instead of picking the best tenant from many applications.
How to advertise a rental property
Once I have a decent idea of the market rent, I place an ad on Craigslist, put a for rent sign in the yard and post it on Facebook. I don’t post in my MLS, because very few people look for rentals with an agent in my area.
How to create an application for a rental property
I use an application I found online and alter it slightly. This may surprise many of you, but I don’t charge an application fee. I like to rely on references and how
well an application is filled out. When I say how well an application is filled out, I mean a couple of things:
- I want to see all sections filled out thoroughly. I don’t want to see an application filled out as quickly as possible with hardly any information. I want to see that the applicants care and want to take the time to fill out an application properly.
- I want to see all employment and reference information filled out. If I see missing numbers or contact info, that’s a red flag. I depend heavily on references from previous residences and current employers.
How to check references on a rental property
I always call references for applicants if I am considering renting to them. I want to talk to the previous residence contact more than anything else. I want to know if they paid rent on time and took care of the residence.
Should you allow pets in your rental?
Pets can be an additional source of income or destroy your house. I prefer not to allow pets at all, but I may allow one dog with an additional pet deposit or an increase in rent. I usually charge a $200 non-refundable pet deposit for a small dog. I always want a pet reference as well, meaning they had the pet in their previous residence and the pet did not damage the property.
Smoking in rental properties
No smoking is allowed in the home at any time. If anyone is caught smoking or breaking any if the other rules, my lease allows me to fine them $750 per occurrence.
How to write a lease for a rental property
Everything needs to be in writing including rent, term, late fees, date rent is due, and things the tenant can and can’t do. A few things I include that tenants cannot do include:
- No painting without written approval
- Do not hang curtain rods without written approval
- No smoking on the property
- No pets on the property (unless specified)
- Only people on the lease and their children may live in the home
- No overnight visitors for more than three straight nights
- No illegal activities in the property
If there are any exceptions to these policies, I put them in writing in additional provisions in the lease. I also have a section that shows what utilities are paid by tenants, in my case all of them.
Lead based paint disclosure in rental properties
With any house built prior to 1978, I have to provide a lead based paint pamphlet explaining the dangers of lead based paint. I also have a lead based paint disclosure signed by the tenants as well.
Deposit on rental properties
I charge one month rent for the deposit and it must be paid along with the first month rent before the tenants move in. The only time I split up the rent and deposit is if the tenants request to reserve the home before they move in. They can pay the deposit first and then pay rent when they move in.
Carbon monoxide detectors and smoke detectors in rental properties
Each state has different laws regarding carbon monoxide detectors and smoke alarms. No matter what your state law is, I would put them in. In Colorado, we have to have carbon monoxide detectors within 15 feet of every bedroom. They are very cheap for the protection they offer and you can plug them straight into an outlet.
If you want to have a hands off investment, you could always hire a property manager and have them take care of all of this. Right now I manage all of my rentals, but I do plan to start a property management business in the future.
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