Becoming a landlord by renting out a home is an excellent way to boost your income. It’s the type of income you can depend on even during financially tricky periods, as you will always have a steady cash flow. There’s a reason so many people have a goal of building a real estate portfolio!
If you have a house or flat ready to go on the rental market, you likely want to get it out there as soon as possible – after all, the sooner you find a tenant, the sooner you earn money. However, some things in life need a little more thought, and renting out a property is absolutely one of them. Before signing an agreement with a tenant, ask yourself these five all-important questions first.
1: Do You Need a Property License?
Some landlords are legally required to obtain the appropriate property license before renting out the property. These are necessary for landlords in certain areas (for example, where there is a low demand for housing) and certain HMOs (houses of multiple occupants). It’s essential to check if you need a property license before renting out your property.
2: Have You Conducted the Appropriate Safety Inspections?
In the UK, there are specific safety measures all landlords must adhere to before renting out a property. These are extremely important; prioritise them if you haven’t done them. To ensure your property is safe for someone to live there, you’ll need to ensure the electrical system, gas equipment, smoke alarm, and carbon monoxide alarm are all in good working order. You can find out all about a landlord’s safety responsibilities here.
3: Do You Know How Much You Should be Asking for Rent?
As a landlord, you’ll likely be in two minds: you want the rent price to be attractive to potential tenants, but you also want to make enough money from the property. Of course, you can look at other rental properties in the area to determine the average monthly rent price you can ask for. However, it’s always better to get a more accurate estimate. House valuations provide a precise estimate of the rental value of your property, meaning you get a good idea of how much rental income you can expect. It will take everything into account, from location to condition, to ensure your monthly rental ask isn’t too much or too little.
4: How Long Do You Want to Rent the Property For?
Most landlords choose a fixed-term contract for their tenants, usually standing at either six or twelve months. Others prefer to have an extended tenancy agreement in which the contract constantly rolls over. There’s also the option of letting a property only for a short period of time, such as three months. You need to know how long you plan on renting your property before signing any contracts!
5: Have You Performed a Background Check on the Tenant?
There’s good news for landlords: there are plenty of excellent tenants out there – the type to keep the property clean while always paying rent on time. Of course, at the other end of the spectrum, there are those tenants who cause a lot of stress, whether that’s because they never pay rent on time or due to excessive property damage. The best way to ensure you end up with a good tenant is to perform a background check. Checking their income and credit rating and asking for landlord references will help you paint a better picture of the type of tenant they will be.
Renting out a property is not as simple as some would imagine. It’s definitely a worthwhile endeavour, though, that’s because of the steady stream of income it can bring in. Just make sure you ask yourself the above questions before you choose a tenant and sign an agreement!
