YOUR NO-RISK GUIDE TO RENTING OUT YOUR PROPERTY
Published by Authorify Publishing Copyright © 2019 Authorify Publishing
All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. DISCLAIMER AND/OR LEGAL NOTICES: While all attempts have been made to verify information provided in this publication, neither the Author nor the Publisher assumes any responsibility for errors, inaccuracies, or omissions. Any slights of people or organizations are unintentional. This publication is not intended for use as a source of legal or accounting advice. The Publisher wants to stress that the information contained herein may be subject to varying state and/ or local laws or regulations. The reader of this publication assumes responsibility for the use of these materials and information. Adherence to all applicable laws and regulations, including advertising and all other aspects of doing business in the United States or any other jurisdiction is the sole responsibility of the reader. The Author and publisher assume no responsibility or liability whatsoever on behalf of any reader of these materials. If your property is currently listed with a Realtor, please disregard this notice. It is not our intention to solicit the offerings of other brokers. Printed in the United States of America
Table Of Contents
To Rent Or Not To Rent?
You Control The Risk
Good Tenants = Rental Bliss
Weed Out Bad Apples
Get It In Writing
Laying Down The Law
Protect Against Damage
10. Fair Housing Act
11. Renting 101
12. How To Get Your Property Rented
13. Ongoing Property Management
14. How To Handle The Move
When I first ventured into the real estate industry years ago, I did so with the hopes of helping sellers like you avoid the headaches often associated with the home-selling process. In my years of experience, not only have I helped alleviate the stress of selling for numerous clients, but I’ve also accumulated years of knowledge to help them get more money for their homes in the least amount of time. I decided to share all of my expertise in one place with potential clients. And that’s why you’re receiving this book. I want to help you have the best possible home-selling experience. And by that, I mean I want you to 1. Get the most money possible for your home, 2. Sell in the least amount of time, and 3. Avoid the headaches most commonly associated with the home-selling process. Think of this book as my gift to you. It contains insider advice on the home-selling process to help you achieve your ultimate real estate goals, including: • Secret strategies to sell your home for more money • Marketing techniques employed by top agents • Advice on how to appeal to today’s buyers • And much, much more If, after reading through it, you want to hire me to help you sell your home, I’d be more than happy to meet with you to discuss a specific plan to sell your home. Happy reading!
AGENT was raised in CITY with X siblings. As a child, AGENT had aspirations of being a OCCUPATION. Never in a million years did he think he’d stumble into the real estate industry, but you can’t always predict where or when you’ll discover what you’re meant to do in life. AGENT was taught at a young age that if you want something in life, you have to work for it. So that’s what he did. And he worked hard. As the years went by, AGENT worked his way from FIRST JOB to LATER JOB, never wavering in his resolve to become the best version of himself with each career move. AGENT got into the real estate industry X years ago when STORY ABOUT HOW YOU GOT INTO REAL ESTATE/WHY. He set out to LIST ASPIRATIONS FROM WHEN YOU STARTED OUT IN REAL ESTATE. As his career advanced, AGENT found his stride working with NICHE MARKET/SPECIFIC MARKET AREA/TYPE. He’s an expert in LIST AREAS OF EXPERTISE/SKILLS THAT SET YOU APART FROM OTHER AGENTS.
Throughout his career, AGENT has earned numerous accolades, including:
• LIST ACCOMPLISHMENTS • LIST SALES STATS ix
• ANY OTHER IMPRESSIVE INFO YOU’D LIKE TO INCLUDE
AGENT aims to provide the highest level of service to his clients and takes deep pride in helping them achieve their real estate goals. AGENT aims to provide the highest level of service to his clients and takes deep pride in helping them achieve their real estate goals.
Testimonials & Reviews for Agent Name
Here’s a list of people whom I have helped buy or sell a home, and what they said about working with me:
Agent-Name had a tough job, but she did it!
We were tough clients! We were moving to City and didn’t have a lot of time to look at houses, having to deal with our employer’s relocation, and all of the other challenges that came along. But, Agent-Name went above and beyond to help us. Even now, one year after the sale closed, I can still call her for business and service recommendations in the area — she knows just about everyone, and is very happy to help.
Agent-Name is the best agent in City!
I’ve used Agent-Name twice so far, and I was impressed both times. I bought my dream home with AGENT a year ago. She worked long and hard to find me the perfect home. And she just recently sold another property of mine. Everything went quickly and smoothly. Both of my real estate deals were done very quickly and professionally. Agent is honestly the BEST in her business. I would highly recommend her.
Agent-Name perseverance got me the house
My experience with Agent-Name during the entire home- buying process, from start to finish, has been nothing short of exceptional. I have a unique work structure, and because of this, it was very difficult to find mortgage lenders that would approve me for a home. I was very frustrated and on the verge of giving up, but Agent-Name insisted that we continue searching. Not only did we find a mortgage lender but also a mortgage that I felt great about. His perseverance is the reason I am now a homeowner. He is professional, punctual, knowledgeable, and very easy to work with. With the highest regard, I will recommend Agent-Name to all my friends and family.
Very attentive to concerns, details, and negotiations
Agent-Name helped me find a house by literally picking it out for me. Every house I wanted to go to, I got there and didn’t love it. Agent-Name was busy taking note of the likes and dislikes I was stating and said “I have a house that you’re going to love”.... AND I DID! I went back 4 or 5 times to show other members of my family, and she accommodated me without complaint. I was a first-time homebuyer, and she walked me through the steps of everything, gave me advice, and constantly followed up to make sure I was doing OK. With her help, I was able to close on the house early, right before I started my new job. I would recommend Agent-Name to EVERYONE, buying or selling. Agent-Name made it so so easy. She guided us through the entire process. She recommended great people to work with
every step of the way. She was available 24/7 to answer any questions we may have had. With her high standards, expertise in the industry, and patience, we would recommend her as a Realtor to anyone looking! She was amazing!
Agent-Name even advised me on how to prepare my house
Agent-Name was a gem. In addition to being highly knowledgeable about the real estate market, with many years of experience, he is a consummate professional. He was extremely easy to work with, gave me very good advice about preparing my house for sale and was very responsive during the entire process of receiving offers, selling and closing. I would work with him again in a heartbeat. He’s that good.
Agent-Name is the first agent I would call
Agent-Name and his team were able to rapidly list, show and sell my property. Being an expert in real estate, he was spot on in his pricing of my property and getting this deal completed. Overall, I highly recommend him and his team. If I want to buy real estate, AGENT would be the first person I’d call.
Agent-Name got us an offer in three days!
Agent-Name was the consummate professional during our stressful and difficult process. In the midst of juggling a ‘failed’ marketing effort with another agent, she presented a
well thought out plan and strategy to sell our home in short order. We needed to move quickly due to a growing family and another baby on the way. She helped alleviate that pressure by securing an acceptable offer with 3 days of listing. We put pressure on her, and she delivered. We couldn’t thank her enough.
Agent-Name kept us calm throughout the process!
Agent-Name always made herself available to answer questions. She worked hard to sell our home and find the best fit for our new home. She and her team worked with us through the entire process and kept us calm when we got anxious.
I am 100 percent satisfied!!
Agent-Name is professional and knowledgeable about everything. She is also always available. I would definitely recommend her to anyone. Very smooth transaction from start to finish. I felt confident with her experience.
Agent-Name found us our dream home
Agent-Name was very efficient and helped us find our dream home within a few short months. She was able to negotiate the price that we wanted for the house. Overall, I would look for her again to help us look for a house if need be in the future. Thank you so much!
Efficient communication and service
Agent-Name and his staff were very helpful in selling our condo. They kept me informed frequently with email, sending reports on showings, offers, and feedback from potential buyers. We are very satisfied.
Agent-Name will get your house sold fast!
Agent-Name is great and has the expertise to get your house sold. The communications throughout our sale (from beginning to end) has been outstanding. Agent-Name understands the stress involved in selling your house, and she updated our family consistently! This made us feel we were in good hands. I have worked with numerous agents, and I highly recommend her to represent you when it comes time to sell your home.
Excellent experience topped with a personal touch
Excellent experience all around, not only knowledgeable but Agent-Name and team have a very personal touch I felt like family throughout the entire process. He always took his time; we never felt rushed or like “just a number.” I sold my home and bought with him. We had lots of questions he gladly answered them with no problem and guided us through the entire process, eliminating lots of stress. I truly appreciate that and would recommend him and his team to family and friends.
CHAPTER 1 To Rent or Not to Rent?
You’re ready to move on from your home to another. Maybe you want to switch neighborhoods, maybe you’ve found the house of your dreams, maybe you’re relocating to another city. Many people just default to selling their home in these types of situations, but have you ever considered renting out your property instead of selling it? Perhaps you know of someone who’s done just that, with great success; however, perhaps you’ve heard of someone left in an unpleasant situation with bad tenants who’ve disappeared with unpaid rent, or damaged the property. Is renting out your property even a good idea? Why go this route instead of just hiring a real estate agent, putting your house on the market, and selling it as quickly as possible? Brandon Turner, real estate investor and author, writes on Forbes.com, “Owning two homes can actually work and be profitable if you decide to rent out the previous home. By keeping the house, you can begin building serious wealth through cashflow and equity.” But determining whether renting out your home, rather than selling it, is a good idea, is a personal decision that will take some time. In the meantime, here are five main reasons for you to consider renting out your property:
REASON #1: MARKET WORTH
One of the biggest reasons to consider renting out your property instead of selling it involves market worth. How is the market currently doing in your location? Is it improving in your favor? If that’s not the case, it might be worth your time (and money) to wait to list your home until things improve, rather than selling for the current value and selling yourself short (and losing out on thousands). This way, you can wait until the market has appreciated, sell it at a higher price down the road, and rent out your property in the meantime. If you’re not sure of the current market worth in your location, you can always do some research, ask someone “in the know,” or hire a professional who specializes in this area. Further, you don’t have to worry about your mortgage payments and other bills while you wait for the perfect time to sell—your tenants will take care of those payments for you, whether you rent out your home for a year, two years, three years, or more—whenever the market improves enough to the point where selling will be worth your while.
This leads to another big reason that homeowners rent out their properties before selling them: long-term investment potential.
REASON #2: LONG-TERM INVESTMENT POTENTIAL
The long-term investment potential of renting out vs. putting the home on the market right away is a big draw for many homeowners who are on the fence. But the basic principle is
simple: Charge your tenants more than your monthly mortgage payment and utilities, etc., and bingo!, you’ve got a profit with that additional income. You can make money from your old home, while living in and paying for another home. Think of it in terms of an almost-free investment that someone else is paying for: not only are they paying more than your monthly mortgage, but they are also ultimately paying down your overall mortgage balance. Then, as your house improves in value over time, you can charge more for rent; this way, instead of just having someone cover your monthly mortgage bills and paying off your mortgage, you can make a profit—every single month—on what someone pays for living in your old home vs what you were paying for the mortgage.
The long-term investment potential is real, and exciting!
REASON: #3: BUILD EQUITY WHILE LIVING ELSEWHERE
Another reason you might want to consider renting your house is having someone else pay to live there while you live in another house. This might sound similar to reason #2, but the difference is that you are actively choosing to rent out your home—not because you have to move and the only alternative is selling, but rather because you can turn your primary residence into an investment property, and then purchase a second primary residence, whether it’s in your same neighborhood, the same city, or in entirely different location, and begin to build equity.
You’ll be building an investment portfolio off your own house.
REASON #4: ALTERNATIVE TO HOME LANGUISHING ON THE MARKET
Renting out your home is a great option if your property has been languishing on the market and you’ve been unsuccessful in selling it, or even if you are unable to sell it for enough money to pay off your mortgage balance. Perhaps you first purchased your home when it was worth more than it’s worth today, and you can’t seem to sell it without needing to write out a check. If this is the case, sometimes the better alternative is to rent out your house so you don’t lose money while you wait for the market to improve to relist your home. You can get your monthly mortgage payment covered, and maybe make extra money each month, as you wait for the market to appreciate, recover, and sell your home down the road at a better, more profitable time.
REASON #5: TEMPORARILY OUT OF TOWN
Finally, consider renting out your property if you don’t need to, or want to, sell your home but you’ll be away temporarily. Are you heading out of town to spend time with or care for family for an extended period of time? Do you have a temporary-only job transfer? Are you going on an extended work vacation? And are you planning to return and settle back into your home without the hassle of house hunting? This is a fantastic reason to rent out your home while you’re away.
You can rest easy, knowing someone else is covering the
mortgage payment and taking care of the house for you, or at least covering the costs of taking care of your house, and then your home will still be there waiting for you when you move back into town. Throughout this handy no-risk guide to renting out your property, we’ll be discussing more about these reasons for renting, as well as other issues, such as dealing with tenants, the actual renting process, and ABC management. Despite the myriad benefits of renting out your property rather than selling it—or even before selling it down the road—many people interested in the idea become stressed or overwhelmed at the prospect, because of all the unknowns, the potential risks, and more. But renting out your property isn’t as scary as you might think.
CHAPTER 2 You Control the Risk
I’ve given you some of the top reasons that renting out your property can be beneficial to you. Yet many people are still resistant to the idea because of the stress and potential risk. I have some good news for you. This section of the book will address two main reasons you don’t need to worry. The first? You can rent out your house with minimal risk. How? You control the risk! Let me explain. There are things you can do and steps you can take to minimize the potential risk to you. This doesn’t mean you eliminate the risk; that’s nearly impossible. But there are steps you can take to dramatically and drastically reduce possible risks associated with renting out your home to others. You’ve probably heard “horror stories” of renting situations gone bad. Stories of terrible tenants, the ones homeowners and landlords absolutely dread and fear. The deadbeat who moved in and didn’t pay rent for six months or even longer and wouldn’t leave, even with legal action. The tenant who held party after party, long hours into the night, upsetting the neighbors and disrupting the entire neighborhood, even involving the police. The tenant who not only failed to take care of the home, but also lost their damage deposit and even completely destroyed the property, leaving the homeowner with thousands of dollars in repairs.
Are these among your fears? They don’t have to come true if you do your due diligence. The reality is that for most of these horror stories (and they do happen), the person renting out the home didn’t know how to reduce the risks. There were no background checks and no references; no policies, procedures, protocols, checklists, or terms and conditions put in place; and no basic strategy to reduce these risks. The property was often rented out to whoever showed interest first and was essentially ready to move in. This is a huge mistake many people make when deciding to rent out their homes. Sometimes, homeowners are so excited about the idea of making money while renting out their property that they neglect the process of actually finding the right tenant and going through the proper legal procedures to protect their investment. Sometimes, people are in a hurry to leave and need to rent out right away, so they seem desperate and let the first available person move in, no questions asked. Big mistake! You want to reduce risk, not increase it. Remember the title of this chapter: You control the risk. That’s the good news—you can avoid being a player in your own renting disaster. Here are some of the mistakes people (or you) could make that can lead to such horror stories:
NOT KNOWING HOW TO ATTRACT A GOOD TENANT
One of the first issues homeowners face after deciding to rent out their homes is attracting a good-quality tenant for their home.
Why? Is it luck? No—there’s a process. You have to learn HOW to attract a good tenant. Yes, this involves work. It takes time, energy, and effort. But it’s worth it to you to avoid the potential risks, disasters, and horror stories to put in the work required in this area. For example, you’ll have to do some research, learn a little about marketing, and use whatever resources available to you. If you don’t put in the time, if you don’t learn and put to use some marketing skills, and if you don’t have (and use) the right resources to find a good tenant for your house, that’s one of the biggest mistakes you can make when renting out your home. Many people mistakenly think they can just throw a sign in the yard and somehow, a magically perfect tenant will just show up. Here’s the real deal: It takes time, effort, energy, marketing, and proper screening to find a great tenant for your house. Some people do “luck out,” and some people know a friend of a friend, but in most cases, you won’t find that great tenant without that effort.
NOT SCREENING TENANTS PROPERLY
Another common mistake people make when renting out their home is not screening potential tenants properly. Some get lucky, but many others end up with a “bad apple” occupying their home for much longer than they’d like. Later on in this book, I’ll discuss this critical issue of properly and thoroughly screening all potential tenants, but for now, let me emphasize that this is probably the most important thing you
can do in the renting-out process. Screen your tenant prospects! It can’t be said enough. Do everything you can to keep those “bad apples” out of your precious home. If you don’t, and you end up with “that” tenant, you have no one to blame but yourself. It’s your responsibility to find a decent tenant for your home. Far too many people avoid this step and end up in awful situations that you wouldn’t wish on your worst enemy.
NOT HAVING A GOOD LEASE
Another area where people often make mistakes is not having a good lease in place. Just any lease isn’t enough; you need a rock- solid lease! The lease needs to work for the specific intricacies of your area, and for the laws of where you live. Lease laws change depending on where you live. And this doesn’t just mean state to state or even city to city; the legalities of some landlord-tenant relationships can vary within a city or neighborhood. So please ensure you have in place a great lease that is specifically tailored to your location—the local area, the exact city or town, the precise neighborhood, etc., so that all your bases are covered. Later on, we'll talk more about the all-important lease.
NOT CHECKING ON THE PROPERTY REGULARLY
Many homeowners who rent out their property run into trouble when they don’t bother, or forget, to check in on the house on a regular basis. They assume that by screening and choosing a great tenant, that the tenant is just automatically going to take care of the home. Big mistake! Maybe the tenant could be trashing the place, either through neglect or damage (or both), and the owner
has no idea because they didn’t check up on the house for a year. Then, when they finally do—let’s say the owner is moving back, the tenant is moving out, or the tenant is evicted—the home and property are so damaged that expensive repairs are in order. So, how to avoid this potential catastrophe? You need to check on your house a minimum of every six months during the tenant’s residency. That way, if there are any minor issues that arise, you can deal with them early on; if there are bigger issues, you can deal with them, too, and either evict the tenant due to the extensive damage they’ve caused, or ensure they pay for the damages before you allow them to continue living there. This bears repeating: Just like you simply must screen your rental candidates, so must you check up on your house regularly, and often. Don’t let more than six months go by in between inspections, during which time you need to look at the entire house and property to ensure they’re in the same condition and being taken care of. Go through every single room, carefully. You can stop a problem in its tracks through your vigilance and regular, frequent inspections.
NOT KNOWING HOW TO EVICT SOMEONE
It seems simple: You’ve got a bad tenant for whatever reason (not paying rent in full, not paying rent on time, not paying rent at all, noise disturbances, theft, vandalism, bringing in pets that aren’t allowed, operating a business illegally, selling illegal substances, property destruction, etc.). Just evict them, right? Problem is, most people don’t know how to evict someone. It’s not as simple as just making a call or kicking them out.
So, in the case of a non-paying tenant, when the tenant stops paying, the owner just “leaves it alone” for a month or two (or three) because they don’t know what to do, and they’re busy with their job, their family, and other life obligations. Because they don’t know how to evict a tenant, they don’t have the time to evict the tenant because they don’t have the time to learn how. As a result, the tenant stays in the house for much longer than they should. You need to know the law, the regulations, the processes, the procedures, etc., and how to deal with all the paperwork involved. Without this knowledge, and the ability to execute it, you could end up in a sticky situation.
NOT BEING WILLING TO EVICT SOMEONE
Knowing how to evict a tenant who isn’t paying rent or is causing damage isn’t enough; you have to actually be willing to go through with the eviction process. This might not sound like a big deal, but you might be surprised at how many homeowners aren’t willing to evict someone who isn’t paying them or is otherwise not the ideal occupant. It can be a very emotionally draining and unpleasant experience to evict a tenant, especially if the homeowner is someone who prefers to avoid confrontation, and/or if the tenant is especially difficult to deal with.
But there’s the thing: You’ve got to do what you’ve got to do! Even if things are emotional, uncomfortable, or worse, you need to
force yourself to push through any discomfort and pain and make that decision you need to make. If a tenant is always late with payments, or is paying you in incomplete amounts, or is refusing to (or, sadly, unable to) pay you at all, then they’ve got to go. Look at this way: Technically, they’re stealing money from you by not paying according to the terms of the lease. If you let someone live in your house for free without paying you and you don’t file for eviction, then you might as well give someone access to your bank account and let them have at it. That might seem a bit harsh, and I’ll be the first to admit that it’s often challenging to evict people who need to go, but in this business, you have to be prepared to make tough decisions and then follow through when the time comes. Evicting people who don’t deserve to live in your home is just one example of a tough decision you might have to make when renting out your property. If you just can’t handle confrontation and dealing with potentially tough and difficult emotional challenges, then maybe serving as a landlord is just not cut out for you. This doesn’t mean you can’t rent out your home and reap the many benefits that come with that, if you do it right; it just means you should consider having a professional property manager manage your home for you. I can say this confidently because, as a professional property manager myself, I know that if I don’t make those tough decisions, if I don’t file for eviction on someone who’s stealing money from my landlords, I’m going to get myself fired. And so, technically they’re stealing money from me, from my family. So,
that’s why you need to be willing to evict somebody, even when it’s a tough and emotional decision.
Be willing to make the tough decisions (screening candidates, doing proper inspections, evicting, if necessary) when the situation calls for it, and you’re on your way to becoming a successful landlord, reaping all the benefits of renting out your property for income. Now that you’re aware of the most common mistakes homeowners make when renting out their home, and how to avoid them, let’s move on to discussing the benefits of having good tenants, and why this will make or break your decision to rent out your property.
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