#1: Not Knowing Their Market
Before you decide what price you want to list your home as in rental ads, read as many as you can find for similar places. Don’t just assume that you can make a monthly profit. You may have to rent it out for a price that is very close to the mortgage and accept that you are building wealth in the equity of the home instead of getting “extra” money every month. Often, homes and apartments go un-rented for long periods because people put large, unrealistic prices on them.
#2: Not Planning for Repairs
You will be responsible for repairing anything that might go wrong with the rental, and so if you’re making a monthly profit (i.e. you are receiving more money in rent every month than your mortgage payment) the wise idea would be to put this money away and try to establish a little nest-egg. That way, if the dishwasher breaks, you have money set aside to get a new one without messing up your own monthly budget.
#3: Not Switching Insurance
Rental Insurance is generally cheaper than regular homeowner’s insurance, so you can save a little money by switching from homeowner to rental. You can also stipulate in your rental contract that your tenants buy rental insurance to cover themselves in case problems arise.
#4: Not Being Accessible
If your tenants can’t get a hold of you, there will definitely be problems. They have to be able to reach you in order to voice complaints, ask for help, and to ask questions or express concerns. If you don’t feel like being at their beck and call, try to return any voicemails in as timely a fashion as you can manage. Try to live as close by as you can, so that you can drop by in person if need be.
#5: Not Being Careful
Make sure to document the condition of your home before you rent it out with pictures and dated receipts for any services or products to upgrade the property, (like putting in new carpets or buying new appliances). That way, if any damage is done while the tenants live there, you can prove that it was not “that way” when they moved in. If you ever need to move to small claims court, these photos and receipts will be invaluable. You should also consider scheduling an appointment with your local housing authority so that you will be able to accept section-8 rental assistance on your tenant’s behalf.