Owning a second home and renting it out is a great way to capitalize on your investment and bring in extra income every month. Many rental homeowners end up purchasing multiple properties in order to further extend their monthly incomes. Whether you own just a single rental home or multiple properties, maximizing the return on your investment depends on several factors, like the value of the neighborhoods where the homes are located, the size of the homes, and the overall presentation and livability of the homes.
Doing the right prep work before renting a home can not only increase the amount you can charge every month in rent, but it can also significantly reduce the number of maintenance issues you or your property management group will need to address on a regular basis.
So if you’re renting a property for the first time and want to learn the tricks of the trade, or if you want a fresh start with your rental home before new tenants move in, check out Blindster’s tips for the best ways to stretch your property investment dollars:
Deep clean everything inside the home.
This may seem like a no-brainer, but it can be surprising to see how many rental property owners skip this step or clean only immediately visible areas of their homes. In addition to making sure the kitchen and bathrooms are spotless, it’s also important to hit spots like the baseboards, window coverings, and small nooks and crannies where cobwebs can form and dust can accumulate. Finally, wipe away scuff marks on walls, shampoo carpets to remove stains and discolorations, and clean hard to see and reach places like the top of the refrigerator, the areas behind your appliances, and the molding around doors and windows.
Test every appliance, light switch, and electrical outlet.
When new tenants move into a rental home, they expect everything to work right away. There’s nothing more concerning to a new tenant than finding out one of the burners on their stove doesn’t work, a light switch is broken, and some of their electrical outlets don’t put out any power. Make a checklist of all the appliances, light switches, and electrical outlets in your rental home and test them one by one, marking each one-off the list as you make your way from room to room. If you find any that don’t work, replace the appliance or call an electrician to fix any issues with the home’s internal wiring before new tenants move in.
Make the home as safe as possible.
Safety is a huge concern for rental property owners due to liability issues. To get your rental home up to code, make sure you have the recommended number of smoke detectors installed on every floor and that they’re all equipped with fresh batteries. If your home uses gas appliances or heat, install a carbon monoxide detector. It’s also important to make sure every staircase has a handrail and that no steps, whether they’re indoors or outdoors, are loose, chipped, or broken. Finally, repair or replace any areas where the carpet isn’t completely flat and level, as bunched up or uneven carpet can represent a major falling hazard.
Upgrade the biggest selling point—the kitchen.
A major overhaul of a dated and unattractive kitchen can make a rental home far more appealing to potential tenants, which means it will stay vacant for shorter periods of time and will fetch more money on the rental market. At the minimum, replace any appliances that are clearly out of date with new stainless steel models. Installing granite countertops and modern tile or vinyl flooring is also a great way to modernize a kitchen and increase the appeal of the entire home. For an even more dramatic effect in an older home, consider removing a wall or two to open up the kitchen and remove any major barriers separating the kitchen from the rest of the home to create a more open floor plan.
Fix any current and future problem areas while you have the chance.
A leaky faucet may be a minor annoyance right now, but it could become a bigger problem down the road. The same is true for things like small roof leaks, sagging gutters, hairline driveway cracks, and moldy and mildewed basements. If you have a vacant or soon-to-be vacant rental home on your hands, take the time to repair or replace any minor problem areas before they get worse and lead to potential home disasters—which are not only expensive to address, but could also put your tenants’ health at risk and damage their property.
Boost the home’s curb appeal with landscaping and pressure washing.
Most renters have realistic expectations for what their lawns will look like, and few expect golf course quality grass and landscaping. But there’s a big difference in curb appeal between a rental home with simple, tasteful, and neat landscaping and a home with bare spots, patchy grass growth, and no decorative plants. A small investment in your rental home’s landscaping and a pressure washed porch, driveway, or sidewalk can dramatically improve its curb appeal.
Decide how you will manage the rental home.
Are you in a position to handle all communication with your tenants? Can you respond to maintenance requests? Are you prepared to handle a possible eviction situation? If not, you may need to hire a property management firm. These firms take a small percentage of the monthly rent in return for their services, which will reduce your monthly income but can significantly reduce the overall responsibilities of being a rental home owner.
Contact your mortgage and insurance companies about your plans.
If you’re still paying a mortgage on your future rental home, it’s important that you contact the mortgage provider and tell them about your plans to convert the home into a rental property. There may be certain requirements you have to meet in order to fulfill your new role. In addition, you’ll also need to change your homeowner’s insurance plan to a plan that covers landlords and rental property owners.
Check out the competition to get a fair rental price.
One of the most important parts of renting out your home is to set the right price. Establishing the right price can be difficult. Setting it too low can cause you to lose out on a significant amount of monthly income while setting it too high can make it difficult to find tenants. Check online classifieds and other websites to find rental homes in your area with similar square footage and amenities, and use those properties as a guide before you list your property on the rental market.