Renting Out Your Home Part One: Initial Legal Concerns & Costs
Congratulations! You’ve decided to make some extra money by renting out your home. Before making the leap, however, there are a few important things you need to consider:
- Landlord / Tenant Laws, Local Codes, and Financial Regulations
Did you know that most states have Landlord/Tenant laws that can affect what you can and cannot do within the rental relationship? How about local health codes and/or city or county licensing requirements for rental properties? Do you have to have carbon monoxide detectors or how many smoke detectors are required? When is rent due and what is the legal late fee? And then there is the question of security deposits: whose money is it and when does it need to be returned? How do you make a claim to be reimbursed for expenses incurred by the tenant?
- Landlord Insurance Policies
Before renting out your home, make sure you talk with your insurance provider to make sure you have an investment property or landlord policy as a homeowner’s policy will not cover loss, damage or injury once you are no longer the primary resident in the home. You will need to plan spending three to seven hours to familiarize yourself with the various legal and insurance considerations before renting out your home.
- Leases, Applications and Communication
Next you will need to have a way that the prospective renters can apply to rent your property. Leases can be purchased online or at an office supply store for relatively low prices ($30-$40). However, many times these leases are very generic and may not be compliant to your local laws, potentially exposing you as a Landlord to undue risk and liability. Use caution to ensure that you are not inadvertently violating a renter’s rights by asking questions that may be unlawful as a landlord to ask. It is a good idea to have your lease reviewed by legal counsel to ensure the lease protects your rights as well as is compliant with your state’s laws. You will need to plan spending two to three hours finding a lease, as well as $100 to $300 for an attorney to review your lease to ensure that it complies with regulations.
As you can see there is quite a bit to know about being a Landlord. There are many ways to put your investment property and yourself at risk by not following guidelines, rules, ordinances and laws pertaining to tenants and rental properties. Think you’ve got a handle on it? Great! However, we’re just getting started…
Check in soon for Renting Out Your Home Part Two: Making Your Home Rent Ready.
Don’t want to wait? Do you have questions, comments, or concerns in the meantime? Feel free to call us @ (501) 404-0674 or shoot us an email @ [email protected].
Don’t worry, we won’t try to pressure you into a sale. We’re here to help.