For many homeowners who find themselves left with a home they are unable to sell for an extended period of time, renting out that house can be the most logical (and least expensive) option. But becoming a so-called “accidental landlord” often comes with a lot of new challenges — especially if your new home is far away from your old one. So, how can you manage such a situation for the best outcome and the least headaches?
Here are 5 steps to helping ensure a smooth rental experience.
- Insure It Properly. You will need to maintain appropriate insurance coverage on the property, so have it evaluated to get up-to-date value and replacement information. Check with your insurance agent about the change to a rental, but it’s likely that your homeowner’s insurance will not properly cover your home if it’s being permanently rented out. Instead, look into landlord insurance, which carries more liability coverage and usually covers business costs like lost rent.
- Outsource Maintenance. Since you cannot be there to make sure maintenance is being done and the house is being kept in good condition, it’s a good idea to hire a few services to care for your property. This can include a landscaper, a handyman to do annual checkups, sprinkler blow-out services, snow removal or HVAC seasonal maintenance.
- Make Local Contacts. When some emergency or repair needs to be handled from another location, knowing who you can call is a big help. Before leaving the area, make contacts with a local handyman service, plumber, air conditioning technician, or electrician so you can pick up the phone and have a problem solved without delay.
- Create a Clear Lease. There is often a temptation to do an informal rental agreement, especially if you will be renting to someone you know, but fight that urge. A clear, legal lease that spells out your rights and responsibilities as well as those of the tenants (addressing things like pets, smoking, maintenance obligations and adherence to any community rules) will make your life easier in the long run.
- Check Out Tenants. Distant landlords must have reliable tenants to make the new situation work, so learn how to do credit and background checks, how to verify employment and to contact references. Once your tenants are in place, have a local friend or worker check in on them occasionally.
While it may seem like these steps add a lot of work to your schedule, setting up your new rental unit properly from the start will make things go much better over the long run. To learn more, contact an insurance agency like AZBY Brokerage Inc.