Congratulations! It’s time to put your rental property on the market. After investing time, money, and care into the space, you’re officially ready to welcome a tenant.
As easy as it may seem, putting your rental home on the market requires much more than just uploading photos onto a popular website. The reality is that there are many moving parts that will affect the success of your property, and ultimately, the profit off your investment.
We’re here to help you prepare. Check out our top ten tips about what to do before you place your property on the market.
1. Consider the best time to list your property
Peak renting season happens when the highest number of renters are looking for a new rental property, and this typically occurs in the summer. In fact, landlords receive up to a 51% increase in applications in summer compared to winter. This is largely due to the school year — students want to secure housing before their semesters start and parents of younger children try to avoid changing schools in the middle of the year. That being said, spring is when renters start their search to plan ahead and secure a good deal on rent, so you want to list your property early and take advantage of the most market activity.
This is also a great time to think through an online property management tool or use a personal spreadsheet to maintain your records. Have an organized system so you understand how profitable your rental is and being organized is tremendously helpful come tax time.
2. Find the right sites to list your property
In today’s digital world, younger generations are turning to social networks and real estate platforms for every step of their rental search. Newspaper ads and word of mouth are a thing of the past, so find a reputable rental site to list on — you have plenty of options. Keep in mind that professional photos of both the exterior and interior are most desirable by potential tenants and adding in a 360° virtual walkthrough of your property can be the difference in quickly securing a tenant. The initial investment will be beneficial in the long run, but today’s phones can do a pretty stellar job if you know what you are doing.
3. Assess the condition of your home with a rental property inspection
Even if your property is in tip-top shape, issues can be unpredictable. Before your property hits the market, it’s helpful to get an inspection. An inspection is a periodical review of an entire property to assess its condition which can help catch early signs of any flaws or allow you to plan for future capital needs.
This process can help account for any deductions taken from a tenant’s security deposit in case of any damages before they move in. By doing this before listing the property, you can not only have a clear idea of your property’s condition before move-in day but also identify future capital expenditures, enabling you to build up your capital account to handle the future needs.
4. Get a jump on maintenance
Maintenance is an important part of having a rental property and requires year-round vigilance. Make sure to check off all regular safety items like fire extinguishers, working smoke detectors, and new air filters. By staying organized and scheduling routine maintenance checks for bigger ticket items, you can avoid potentially larger issues down the road. The more you prioritize creating a safe and quality environment for your future tenants, the better your relationship with them will be.
5. Invest in upgrades to add value
Updates will not only keep your tenants happy but also add value to your property, resulting in an increased profit. Upgrades like smart thermostats, smart locks, or security cameras can increase your asking price for rent by hundreds of dollars. And modern fixtures, stainless steel appliances, and things like an in-unit washer and dryer make a big difference in terms of standing out amongst other properties. Upgrades are a win, win — improving the value and longevity of your property while making you and your tenant’s life a lot easier.
6. Set a rental rate & understand the market
The rental market is booming, but it’s important to understand how your property fits into the scene. Look at the rental prices of comparable properties and your neighborhood’s average rental prices to give you an idea of how much you will be able to charge your own tenants. If your rent is too high, the chances of you getting beat out by competitors is a lot more likely. But if it’s too low, you’re only selling yourself short. There are also several rent anaylsers like Rentometer to help you get started, but if you aren’t seeing many applications, you may have to lower your expectations and adjust the price accordingly.
7. Draft your rental agreement
A rental agreement protects both you and your future tenant. A strong rental agreement sets expectations for everything — the rules for the property, payment procedures, and other necessary information. This detailed contract will help your renter understand your expectations and give you peace of mind that your property is covered from any issues under the law. Include necessary information like house rules, payment plans, garbage schedules, and your preferred methods of contact. Don’t cut corners on the rental agreement — use an attorney or real estate professional to help draft the legal document. A comprehensive agreement prevents your tenant from taking advantage of your property, so be diligent when it comes to covering all the bases.
8. Come Up with an advertising strategy
Advertising is key to attracting quality prospective tenants. In addition to expanding your pool of candidates, it also allows you to filter out those who aren’t a good fit. Tenant turnover is a big expense for landlords, so you want to be thoughtful and proactive in spreading the word. Talk to family and friends to see if they know of anyone looking for a place. And highlight the specific items that tenants are looking for in your advertisements – such as extra storage, an office/bonus space, appliances like dishwashers, washer/dryer, and ice makers, and perks of the location. Quality photos and the right messaging for your property are a necessity when it comes to getting quick responses to your listing.
9. Evaluate potential renters
As exciting as it is to see an influx of interest in your property, you need to make sure the potential renters you pick are what you want in a tenant. Are you okay with students using your property where parties or large gatherings may happen more regularly? How about a family with multiple children under the age of 10? Do you want a single tenant, or are you okay with roommates? Pets? These are all things to consider before listing your property to help narrow your pool to candidates you’ll be happy with.
Remember to take your time when choosing a tenant. It’s better to forgo the overly impatient tenant or one that comes with additional months’ rent upfront without doing your due diligence first. Yes, finding a tenant quickly is great but not at the detriment of going 1-2 months without getting rental payments — or worse, having a tenant that doesn’t treat the home with respect.
Consider asking potential renters for credit scores, former landlord referrals, income verification, or personal references to help you feel more confident in the people living in your property. There are a host of wonderful online tenant screeners that can help handle most of the back-end information. Typically, tenants should have 30 percent of their monthly income available for paying rent. Also, be stern with your deposit or earnest money. If they aren’t financially responsible to have this available, there could be problems down the road.
10. Understand that your work doesn’t end after renting the property
Renting out your property is a business and just because you found tenants, doesn’t mean you can check out. Landlords are expected to address any problems regarding the property — whether that be a clogged drain or a 2 am phone call when your tenant is locked outside in the cold. If your property is in another state, consider hiring a property manager to deal with these issues in your absence. This will of course be an additional cost, but having someone you can trust to handle the day-to-day issues may make your job a lot easier.
Rental properties are a great investment as long as you’re willing to put in the work. “Passive income” is purely a tax term — nothing about becoming a landlord is passive. If you’re looking to invest in a rental property but aren’t sure where to start, reach out to K Wealth Advisors for guidance on making the most of your investment. We can help you schedule a GoodFit meeting, and discuss your goals and options today. #KWA