Renting out property can be beneficial. What is the process that goes into it?
Property rentals are part and parcel of the property industry product offerings. There are multiple types of rental housing—from apartments, townhouses, houses, student flats to single-family and multi-family units. For landlords, property ownership is a financially rewarding investment which comes with a sense of security. Industry research shows that most first time buyers prefer to live in the property they have just purchased. For others who have gone past their first property, renting the property out to prospective tenants is a common consideration for income generating purposes and also just moving on to better neighbourhoods and bigger properties.
In the current economic times hampered by the Covid-19 pandemic, landlords are not only facing stiffer competition in the marketplace, but also a growing risk of rent deferment as consumers are squeezed tighter. It is therefore more important now than ever to secure quality tenants.
What type of guidelines should one consider to rent out property?
Determine how much rent to charge
Get an idea of rent amounts by checking newspapers, online resources or neighbourhood rental signs. Be realistic about rent levels. The rent may be lower than your mortgage payment, but if you want to find a tenant, the rent must be comparable to what’s in the market.
Appoint a reputable agency with a history of successful rentals in your area. It should have a specialised rental division with an international footprint and relationships with top corporates, which is particularly important at the top end of the market.
Select an agent who is passionate and can take your property to the market with conviction and vigour. Anyone can walk around a house pointing out the various rooms, but that is not someone who has your best interests at heart. Additionally, property negotiations can be tough, with everyone looking to get a deal, so choose an agent with the courage to say “no”, and remember that the harder they fight to hold their commission is an indication of the level to which they will fight to get your rental each month and achieve a successful outcome should problems arise.
Prepare for the new tenant by thoroughly cleaning your home and making sure appliances, doors, windows and other things are working and are in good condition. If you’ve decided that you are renting out a room or area within your house, make sure that you can secure that area from the rest of your home.
Get the agreement in writing
Ensure you have a written and signed rental agreement in place. This should clearly outline the terms and conditions of the lease, the monthly amount payable and your responsibilities as well as the tenant’s obligations. Define the house rules. You may also insert penalty clauses that apply if the tenant decides to leave the property before the lease term is up.
Protect your property with insurance
Protecting your property with the correct insurance policy is extremely important. You need a different policy if you’re renting a property to a tenant versus using it as your primary residence. This policy covers your home’s structure and loss of rental income, if repairs are needed. If well implemented, the guidelines listed above will protect you from stress and possible loss of income as well as help you secure a quality tenant.