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Before Renting Your Townhome

If you're like a lot of people, you're intrigued by the thought of renting your townhouse. After all, there are a number of benefits in doing so:

  • Tax breaks
  • Generating income that will cover the bills for the place
  • Potentially creating a profit
  • Deterring potential vandalism that often occurs in empty homes
Kitchen view of a townhome.

6 Tips You Should Know as a Landlord

Here are six tips for new landlords to help ensure a smooth renting experience.

1) Understand Your Responsibilities

Becoming a landlord involves responsibilities you'll have to fit into your regular schedule. And, you'll need to know whether you're up to handle these obligations, according to And, it doesn't always run smoothly. You'll have to stay on top of things like:

  • Ensuring the rental space is safe, clean, and liveable
  • Conducting maintenance and repairs
  • Collecting rent
  • Making required financial payments, such as utilities, insurance, taxes, and mortgage
  • Avoiding property wear and tear
  • Keeping up with safety codes
2) Get Things in Writing

To help ensure each party (you and your tenants) understands their obligations and rights, you should have a written lease. An enforceable lease will comply with your region's rental, fair housing, insurance, and tenant laws. The laws will, of course, differ across counties, cities, and states, so it's a good idea to work with a lawyer. Avoid Internet blank leases since they might not comply with laws of certain areas.

Your rental lease should spell out:

  • Security deposit, typically a month's of rent or more
  • Lease term ━ An annual lease will provide more stability if you're keeping the property and a month-to-month lease will offer you more flexibility if you're selling
  • Association rules that must be followed
  • Repairs and which party is responsible for what
  • Due date for rent and any late penalties
  • List of tenants
  • Routine maintenance and upkeep responsibilities like lawn care and landscaping
  • Who's responsible for homeowner association fees
  • Policy for pets and related deposits
  • Eviction terms for failure to pay rent or property damage
  • Arrangements for showings if you're planning on selling your home while you're renting it out
3) Be Smart About Budgeting

When you become a landlord, you need a strategy to save money and reduce some of your out-of-pocket business expenses. A few things you can do to help budget and save money are:

  • Keep the rent low: By lowering the rent, you can stand out from the crowd of competing properties, keep your rental occupied, and even reduce turnover.
  • Choose to rent smaller properties: Small properties are simpler to repair and upgrade. Of course, you'll be able to charge more rent for bigger properties, but like with any home, bigger typically means bigger everything else like upgrades, repairs, insurance payments, and property taxes.
  • Don't use a property manager: If possible, try and manage your own properties to help save some money and keep more profits. Property managers do make it easier to deal with the responsibility of renting out, but they also come with a cost.
4) Screen Your Tenants

When choosing tenants, choose carefully by screening them. You'll want someone you can trust to take care of your property and pay their rent on time. Ask for references, do a background check, and check their credit and criminal history, says

5) Know Your Rights as a Landlord

As a landlord, you also have certain legal rights, primarily related to protecting your income investment. Learn and get to know the specific laws of your state and general laws for renters and landlords. According to Forbes, you should know both local and federal Fair Housing Laws.

There are state laws in place for protecting your investment. For instance, you might require a monthly rent payment as well as other payments for things you specify in the written lease, like utility bills. You have the right to evict a tenant (after giving them a notice of eviction within a reasonable time) if they're not paying their rent.

6) Protect Yourself and Your Renters

Another thing you should understand is that your existing homeowner's policy will probably not cover you if you're renting out the property. But, you will require rental home insurance, which will basically cover medical expenses, structural damage to the home, and loss of rental income. You will want to urge your tenants to also get their own renters' insurance policy so their personal belongings are protected too.

If you'd like to learn more about renters insurance and how you can ensure you and your tenants can stay protected and covered, make sure you contact your local insurance agent.

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