How to Get Your Home Ready for Rent
Considering renting your home? Maybe you don’t have enough equity to get what you want out of it if you were to sell right now. Maybe you got a job offer out of state and aren’t ready to let go of your home. Maybe you bought your home with the intention of one day leasing it out as an investment property but you aren’t sure how to get it ready. Well, that’s why we’re here!
Many people choose to rent out property for a variety of reasons. Let’s talk about a few reasons people choose to rent out their primary home.
Why rent your home?
– It’s an investment. By renting your home, you can continue to build equity with the assistance of a tenant’s rent to pay down your mortgage. During this time, if your home is in an area that has historically appreciated in value, your home may gain value as well which will build wealth for your future. The longer you hold on to your property, you may experience a monthly cashflow that covers the expenses to hold on to it.
– You owe more than you can reasonably sell it for in today’s market. If you’ve put a lot into your home or you haven’t been there for very long, it might not make sense to sell but you’re ready to move into a larger home or a home in a different area. By leasing it out, even just short term, you may have enough equity to sell it in a few years and make back what you’ve put into it.
– You’ll eventually move back into the home. If you’re taking a job contract out of state but love your home, you may want to consider renting it for your contract term so you may move back into it when the time comes. You’ll have someone else caring for your property and maintaining while hopefully maintaining enough of a profit to cover management fees and make-ready costs.
Before we tackle how to get your home ready, let’s talk about the risks associated with it to make sure your why makes sense.
– If you still have an open mortgage, you are still responsible for the payment of that mortgage. That means that while the home is vacant, you will be paying on the house out of pocket. This could also include a delinquent rent from a tenant causing you to make that payment before you have reimbursement.
– Depending on what your monthly mortgage payment is, the margins you might be making may not be enough to make sense. Take into account the costs to rent the home such as make ready cleaning and repairs each time the home is vacated (including when you move out!). Consider if you have enough of a financial buffer to cover vacancies in between tenants. You may also opt to have a property manager take care of your home for you which will cost you in lease up fees and monthly management fees.
– As a homeowner, you know that unanticipated repairs may come up. When a tenant is living in your home, you are still responsible for repairs to the home not associated with neglect or damage. This may mean that repair costs eat away any profit you would be making that month.
– If your tenant becomes delinquent in rent, you may have to evict them. Evictions are not fun and they’re definitely not cheap. In the event that you get a bad tenant or the tenant has an extreme life event that prevents them from paying their rent, you may have to file eviction. Sometimes, a tenant may receive the eviction notice and abandon the property in which case you would keep their security deposit and could immediately put the home back on the rental market. If they do not leave, it will involve court proceedings, sheriff lock-outs, and mandatory timelines. It is not as simple as throwing their stuff out in the yard and having locks re-keyed. In the state of Oklahoma, you may serve an eviction notice providing the tenant 5 additional days to pay up. At that point, eviction may be filed with the courts as an “unlawful detainer.” You will need to wait until this hearing. We recommend that an attorney is hired to help you pursue collecting money from the tenant for unpaid rents. If the judge agrees with you, they will order eviction and a writ of possession setting a vacate date for the occupant. The sheriff will post a 72 hour notice on the tenant’s door and come back. At this point, you will want to have a locksmith or handyman out to change the locks. However, if they have left personal property behind, the state of Oklahoma requires that the landlord store the abandoned property for thirty days at which point after, you may choose to sell/donate/throw away what remains. Again, a lawyer can help you recover costs for this storage whether it’s fair market rent while it remains in the property or the cost to move it to a storage unit and the rent of the storage unit. During this time, you are still not receiving that monthly income from a tenant.
Have I scared you off yet? If not, let’s talk about how to get your home ready to rent!
– Deep-clean the house. We want to get the home show-ready and move-in ready. Remember that these are typical start-up costs. You will want to hire a professional to scrub the whole house from ceiling fans to baseboards. Don’t forget to have appliances cleaned as well! If you have carpet in your home, have it professionally steamed & shampooed. If tile grout is excessively dirty, you may want to pay to have this steamed and scrubbed as well. Moving forward, cleaning costs will be billed back to the tenant upon vacancy.
– Do minor maintenance and repairs inside. Replace burnt out lightbulbs, fix any drippy faucets, change the air filters, and have your HVAC serviced if you haven’t in the last 12 months just to name a few. If you’ve been living with something that doesn’t work properly such as a door that doesn’t latch but you’ve just been living with it, go ahead and adjust the door so you don’t have to call a handyman out to do it when the tenant complains about it later. Patch and paint any holes left in the walls.
– Do minor updates if necessary. It’s easy to sink too much into updating a home for a tenant. Remember that upgrades may help a tenant choose your property over another property but we aren’t looking for top of the line updates in most rentals. You’ll want to consider what kind of return you will get from the improvements both in a possible increase in rental rate and how much time and money it may save you to go ahead and do an improvement. If you were considering replacing the carpeting, maybe opt for a tile that will have much greater longevity. If you’ve painted rooms non-neutral colors, go ahead and put a new coat of paint with a neutral that matches the rest of the home’s aesthetic. Keep that paint swatch handy so touch-ups can be completed after a vacancy.
– Do maintenance and repairs outside. Clean up garden beds, rake leaves, and trim trees. While tenants are typically responsible for yard maintenance, keep in mind that they may not be as mindful about these things as you have been. You may want to freshen up your garden beds with low-maintenance perennials that don’t need much attention. Caulk any gaps in windows, doors, siding, etc. Replace any damaged screens in the soffit, crawl space vents, and windows.
– Re-key the locks. You will want to change all the locks, garage door and alarm codes. Remember locks for mailboxes, gates, and sheds. Don’t forget garage door openers as well! We recommend switching all locks to Kwikset Smart Keys so that the locks can be perpetually re-keyed after each tenancy without having to call a locksmith out each time, saving you money in the long run. This is a smart decision to ensure security of the property.
Considering hiring a property management company.
A property management company will take a lot of the stress out of having rental property. Most property managers do the following for you:
– Advertise for new tenants
– Show prospective tenants
– Use high-end background checking services to screen tenants
– Negotiate and sign leases
– Collect rent, pay bills, and disburse money
– Keep track of profit/loss on your property
– Take maintenance calls and schedule repairs
– Send reminders for seasonal tenant responsibilities
– Mediate between you and your tenant
– Follow state laws to keep you compliant and reduce risk
– Issue legal notices
– File evictions (you pay lawyer & court fees)
We know that’s a lot to take in! Congratulations on making it this far! If you’re considering renting your home or buying your first investment property with the intention of leasing it, don’t hesitate to contact us with your questions and concerns. We’re here to help you!