Learning how to rent your house out can be a great way to make extra money. Whether you’re a real estate investor or have some extra space in your home, renting can be big business.
Some Airbnb hosts earn over $100,000 a year. With real estate rentals, you can build a passive income by renting out your properties.
This leads many to want to invest in real estate. However, not everyone makes enough money to get by. Some investors and Airbnb hosts lose money.
Would you like to know how you can build wealth by renting out your home? Keep reading to find out.
How to Rent Your House
So, you decided that renting out your house is a great way to make extra money. Where many people stumble when they rent property is that they treat it like a side hustle instead of a business. When you treat your rental as a business, you’re likely to look at the bottom line differently.
What’s Your Bottom Line?
Start by taking into account how much you need to make on your property rental. Your property rental will have additional costs beyond covering your mortgage, property taxes, and utilities.
There are additional costs that many people don’t know about when they’re renting out their home. There are more taxes you’ll have to pay because you’re making additional income. You’ll definitely want to hire a tax professional to help you navigate the murky waters of tax law for landlords.
If you’re working with a property management company, you’ll have to pay property management fees. Don’t forget about maintenance, repairs, insurance, and legal fees.
You must take into account the local real estate market, too. If you need to make $1200 a month on your rental, but comparable properties are only renting for $900 a month, you will have a hard time renting that place out.
Unless you live in a highly desirable neighborhood or the property has some unique qualities, you’re unlikely to command a higher amount. Some of the unique characteristics that might command a higher rental rate are owning a historic property or if the property was newly renovated.
If you want tips on how to get the maximum amount of profit for your rental, take a look at this website for all of the information that you need.
Getting Good Tenants
For most landlords, they’d say that finding a good tenant is the key to having a successful property. With a bad tenant, you could be dealing with late rental payments, evictions, criminal behavior, and destruction to your property.
For long term rentals, your priority is to make sure that the person can pay their rent and will take care of the property.
You can’t go on your gut feeling about people. You have to make sure that they will be good renters. It’s customary for landlords to have renters fill out an application, verify income sources, and run a background check.
One of the finer points of learning how to rent your house is finding a company to run a background check on prospective tenants. You might be inclined to run a credit check as well. Using a credit score is legal in some states, but landlords are prohibited from doing so in others.
You can check someone’s background yourself on Google and see what comes up. You are better off using a professional service that’s accredited. You should also contact the person’s employer, past landlords, and personal references.
Finding Good Renters on Airbnb
With Airbnb or vacation rentals, it’s a little different because you’re working with temporary stays of a week or two. That can make it challenging for you because you will be more likely to have more cleanup fees. You’re dealing with people who are on vacation and might be there to party, which makes them likely to leave a big mess behind.
How can you find good people to rent your home? If you’re renting your place through a vacation rental website like Airbnb, there are vetting procedures in place. Airbnb does have a vetting process in place, but you’ll want to do your due diligence, too.
Check to see if there’s a complete profile, for starters. Things like a profile picture and completed information can go a long way to show that someone is a legitimate user. Check to see if they’ve rented before and if they’ve been a member of Airbnb for a while. That will demonstrate whether someone is a real community member or not.
Have a Strong Lease
Once you find a good tenant to rent to, you’ll need to get everything in writing. A strong lease that’s prepared by a legal professional will work. Don’t rely on a template that you found online. While those can give you an idea as to what should be included, it may miss some major points.
You’ll need to spell out the lease terms, whether that’s month-to-month, six months, or 12 months.
Lay out policies regarding pets, repairs, utility payments, property rules, and guidelines in case someone needs to enter the property for repairs.
You do need to have a strongly worded lease to show what happens with late payments and what happens in case of eviction.
Learn How to Rent Your House Now
Once you learn how to rent your house, you open the door to a great opportunity. You can build wealth, create a great side income, and produce enough money to quit your job for good.
While all of that sounds great, there are some major pitfalls you need to understand. There are taxes, fees, and liabilities that you need to be concerned about as the owner of the property.
If you treat renting out your home like running a business, you are bound to be profitable.
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