” What Condition do you want you’re House In? “

There is no end to the amount of improving you can do to your house before renting it out. The problem becomes learning when to stop. When is good enough, good enough?

A house should be clean, empty (unless you are offering it “furnished” which is uncommon) and free from any major repairs at the time the tenant moves in. Be sure everything is up to code, to the best of your knowledge. Have a professional carpet cleaner clean the carpets before showing the property.

I recently posted this question (how much should you improve your property before putting renters in) in the Edward Casey Blog, and here are some of the answers I got:

“On deciding how nice to make a rental in preparing it for rent, I have two primary areas I consider: What kind of return will I get from the improvements I’m considering and how much time and aggravation will it save me (if I do the improvements)?” -Jeffrey Long

“I try to have competitive advantages that aren’t easily destroyed. Vacancy is the devil, and if little things like garbage disposal will create less problems and give me an advantage, for not that much money, to me it’s a no brainer.” -Joe Delia

“We strive to offer a clean and better looking unit compared to the competition and we rent them competitively as well. Everything is done with a cost/benefit approach and to minimize repair and service calls.” -George Paiva

“It’s also important to understand the demographic that you’re marketing your property to. Just because YOU wouldn’t want to live in a lower quality residence, doesn’t mean there aren’t hundreds of people in that market who would be more than happy to. Your standards may not (and probably doesn’t) reflect the exact standards of the customers in your market.” -Seth Williams

Remember, the home does not need to be as fancy as you would want it to be if you were living there. Look around at other rentals in your area (via driving around or pictures online) and try to see what the typical quality is. Tenants will generally never take as good of care of your house as you do – so don’t spend too much time or money making unnecessary upgrades that will only be ignored or broken.

If you have questions about a certain upgrade, do what I did and post the question on the Edward Casey and ask. You may be surprised by the answers you receive.

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” The Move-in Condition Report “

By this time, the rent and security deposit has been paid and lease has been signed. It’s now important to do one final thing before handing over the keys: the move-in condition report. The move-in condition report is simply a paper that the tenant will sign those documents, in detail, the condition of the property. Allow the tenant to take some time walking through the property and inspecting it – letting them take notes of the condition of each room. If there is a hole in a door – document it. If there is a light switch that doesn’t work – document it. If there is a stain on the carpet – document it.

The move-in condition report is designed to protect both your interests and the interests of the tenant when it comes time for the tenant to move out. As much as you might think you’ll remember every detail of the home – you won’t. By documenting everything and having the tenant sign-off on that documentation, the tenant cannot come back to you next year and say “oh – the giant hole in that wall was already there.”

For the same reason, I also recommend taking photos (or a video) of the property before handing over the keys. This will be further evidence in the future when the tenant moves out. In many States, a landlord cannot deduct any charges from the security deposit if a move-in condition report was not filled out when the tenant moved in. Do not make this mistake – document, document, and document. Some landlords will even photograph and/or video record the walk through itself to document the tenant noting the condition of the property.

” How to Rent Your House: Questions to Ask Yourself First “

Before handing the keys to your house over to a complete stranger for care, there are decisions you need to make. In fact, the decisions you make now, before even searching for a tenant, will make the biggest impact on the success of your rental.

The following are some questions to answer before you rent out your house:

Why Rent Your House?

Perhaps you are on the line, trying to decide whether or not renting your house is a good idea. Therefore, the first question you need to ask yourself before “how to rent my house out” is “should I rent my house out?” If you’re choosing between renting your house vs. selling it, I’d like to make the case why renting out your house is the best decision. After all, the benefits of renting out a house are numerous.

  • Your primary home, while a necessity in life, is not typically an asset or investment. An asset is something that makes you money, where a liability is something that costs you money each month. By renting out your home you are able to transform your liability into an asset.
  • By renting your house, you are able to continue to hold onto your house while the tenant’s monthly rent pays down your mortgage each month. During this time, property values (hopefully) will climb and build wealth for your future. You may also begin to experience additional monthly cash flow if you can rent your house out for more than what your monthly expenses are, which should be the goal for all potential landlords.
  • Renting your house out may also help start your investment career with no additional costs – since you already own the home. This could be a first step in a tried-and-true method for building wealth. Many real estate investors begin this way – by renting out their homes as they upgrade to bigger or better properties throughout their life. This may also help fund your retirement, as you may end up owning multiple properties “free and clear” by the time you are ready to retire, providing monthly income or a lump sum if you sell.
  • Finally, by renting out your house you retain the possibility of returning to that home. This is especially helpful if you’ve been forced to move quickly because of temporary job relocation.

” Don’t trust everything you read in a real estate ad “

If you don’t read between the lines, you might fall for every word in a real estate ad. Like any ad, real estate classifieds are meant to pique your interest enough to make you take a closer look. Be a savvy buyer and decode the clever phrases sellers use to draw you in.

For example, if an ad says a home is “cozy,” it’s probably very small. “As-is” means there’s likely a lot of work to be done. “Motivated sellers” may be more willing to negotiate their price, but get an inspection to make sure there’s not an underlying reason (like faulty wiring or bad plumbing) they can’t wait to sell. Learning the lingo will help you keep realistic expectations for showings.

” Handing over the Keys “

When the tenant has filled out the entire lease agreement, both parties have signed it, the move-in condition report has been signed, and the rent has been paid – you can now hand over the keys to the tenant to allow them possession. Although the tenant may ask – never let a tenant move in things before signing the lease and paying the rent. The consequences for failing to do this could be disastrous.

Be sure that you have made it clear to the tenant the rules you expect, as well as the procedure for paying rent, requesting maintenance repairs, and other details about your house. By training your tenants, you set the ground rules ahead of time and ensure they are aware that you’re not the kind of landlord that they can walk all over.

” Accepting the Rent “

During the lease signing, when you get to the part that says how much the monthly rent is – this is a good time to get the money for the first month’s rent. You should have already received their security deposit (in the form of a “deposit to hold” when they were approved) so typically this is when you will collect their first month’s rent.

If a tenant moves in during the middle of the month, I don’t pro-rate the amount they pay upon first moving in. Instead, I pro-rate the second month to match the first In other words – every tenant pays a full month’s rent when they move in, but when it comes time to pay the rent on the 1st of the next month, they will only pay for the amount of days they lived at the home in the previous month. For example – if the rent is $1200 per month, and they move in on the 10th of January, they will pay a full $1200 for rent when they move in, but will only pay $800 on February 1st.

One final note on the rent: Only accept rent in certified funds, such as a money order or a cashier’s check. Don’t take cash and don’t accept a personal check – especially for the first month’s rent. You do not want to move a tenant in and find out weeks later that the check was bad, forcing you to evict. This is a wise policy to have all around in your relationship with your tenants: certified funds only.

For paying rent in the future, I recommend not picking up the rent in person, as this will only train the tenant to expect you each month. For my rentals, I mail monthly statements to the tenant and they mail their certified funds to my PO Box. Many landlords have different techniques for collecting rent, so be sure to check out with Edward Casey for more suggestions and ideas from landlords. Ultimately, you may change or adapt your style as you learn more and grow.

” What if Things Go Wrong? “

Congratulations! You’ve officially gone from a vacant house to a fully rented home to great tenants and have joined the ranks of your fellow real estate investors. However, your journey is not over – but just beginning.

As a landlord, it is now your responsibility to ensure rent is paid on time, your tenants are properly trained in the most efficient manner possible, late fees are given when needed, repairs performed when required, and bookwork kept up to date.

During this process, things will go wrong. You will face problems that you might not immediately know the answer to. I highly recommend that, with any problem you face, come ask for help from the Edward Casey home owners. There are hundreds of thousands of posts that cover every nook and cranny of the investing world – all for free and all right at your fingertips. If the question hasn’t been asked before – just jump in and post a question. Within hours or even minutes, you’ll receive feedback from seasoned landlords across the world. The advice I received from Edward Casey was the most instrumental tool in growing my rental business and becoming financially free. I encourage you to stay close to Edward Casey Blogs and do the same.