For homeowners with an excess of real estate, renting out your spare property is a great way to earn income. For those still paying the mortgage, getting tenants to pay a monthly rent can ease the financial burden. In order to attract more people to check out your rental property, there are a few things you should know about. Preparing your rental property beforehand and knowing the rules of renting can make you an excellent landlord in no time at all.
Rental Property Basics: What You Need to Know Before Putting Out a “For Rent” Sign
Can you rent out your property if you have an ongoing mortgage? While the answer is a resounding yes, you should also check the fine print of your loan agreement first before putting your rental plan into action. That’s because banks and other lending institutions find it safer to award housing loans to buyers who want a place to live. This type of buyer is more likely to stick with their purchase compared to investors who are more likely to bail out at the sign of economic trouble.
Check Your Own Mortgage Contract (If Ongoing)
In some cases, loan agreements come with a stipulation or two regarding rent. One is that the new homeowner can rent out the property only until a certain period elapsed (usually a year). Or, the loan agreement may require the buyer to state the reason for purchase and inform the bank of any changes. Once the buyer changes plans and rents out the property, the bank might impose penalties.
It also pays to check out the prevailing rental rates in the area. Instead of unilaterally going with your gut feeling and throwing out a number, get a firm grip on your situation. Ideally, you’d like monthly rent checks to cover your monthly mortgages. However, it doesn’t work that way. One way to determine the property rental rates is to calculate 0.8% to 1.1% of your property’s total contract price. While 0.1% is the ideal rate, factors such as location, demand, and amenities can also come into play. Additionally, look around at the neighborhood for the going rates. Ideally, you’d like to check out rental rates for properties similar to what you own. This will give you an idea of the acceptable range in the area.
Research Local Laws on Rental Properties
Finally, you might want to brush up on local laws and guidelines on rental property. The key things to look into closely are rental increase guidelines and tenant rights. There are national laws such as the Rent Control Act of 2009 that specify how much a landlord can increase rental rates. Also known as RA 9653, the law also provides other rules such as maximum deposit rates and tenant’s rights against sudden or forcible eviction. In addition, other local laws may also apply that landlords should be well aware of. This may include specific responsibilities of the landlord with regard to maintenance and upkeep of the property. This includes fixing broken windows, replacing bulbs, freshening walls with paint, and inspecting the water pipes.
Getting Your Rental Property Ready
Checking up on your rental property before making it available to the public is also a good idea. It’s not just a bit embarrassing to have potential tenants point out leaks, dents, or any other problems during an inspection. It also removes any opportunities for tenants to lowball offers due to alleged poor maintenance. Putting some effort to fix up the property and making some general cleaning and maintenance work can also make the rental property more attractive.
Ideally, you should also make an item inventory and status check for the entire rental property. List down all the equipment and note the dates of your last maintenance tasks. For example, note the replacement dates of all light bulbs (ideally, you installed new ones prior to the tenant moving in) or put in a new filter in your water system. You can also note the current electricity meter consumption as well as the last water meter reading. Providing this list to your tenant prior to moving can avoid a lot of potential disputes in the future.
Lawyer Up and Visit the Bank
Finally, have your contract looked over by a lawyer in order to check if all provisions are above board. In case some disputes arise in the future, this simple checkup ensures that your agreement is ironclad and legal.
At the same time, prepare your finances as a landlord. How do you plan to collect rent every month? Whether you’re okay with online transfers or a monthly check, you’ll need to open a bank account to prepare for those incoming payments. Once you managed to get a deal with a tenant, share the information as soon as possible. Many banks waive transfer fees or relax deposit rules if your tenant enrolls your accounts.
Let Ohmyhome Help Get Tenants For Your Rental Properties
Finally, you’re ready to let the world look into your rental property. You can choose to list your property on a number of social sites or in local community directories. Or, you can make it simpler by enrolling your units in tech property platforms such as Ohmyhome. Ohmyhome is a tech property platform that aims to help Filipinos get the property of their dreams, whether it’s for purchase or for lease. With their extensive network throughout the country, Ohmyome can find you a tenant in no time at all. Looking for tenants for your rental properties? Let Ohmyhome Philippines help you market your units. You’ll also get free expert advice on renting out and managing your property. For more news and information, download the Ohmyhome iOS or Android app. Or, follow our Facebook, Instagram, or YouTube social accounts to receive daily updates.