When considering investing in real estate, one area to consider is renting out your home. You can opt for long-term or short-term rentals. Either way, when you choose to rent out your property, be aware that it involves more than putting out a “for rent” sign and waiting for potential tenants. As much as you’re gaining a new income stream, you’re also opening yourself up to landlord responsibilities. This article will help you better understand what it means to be a landlord and ensure your interests are protected.

Finding the Right Property

The first thing to do is find a property to rent out. Perhaps you already own a property you inherited from a loved one. It could also be a home you currently occupy and are looking to leave without selling. In this case, you only need to worry about finding the right tenants and how to be a responsible landlord.

However, if you’re considering buying property to rent out, set clear goals and criteria. For example, who is your target market? This can be families, young professionals, or students. With that in mind, you can choose the right property suited for your target audience. In addition, find the right location. Ideally, it should be an area where people are looking for rental homes. This way, it will be easy to find tenants.

Understand Your Responsibilities

Renting out your home comes with a few responsibilities. You may be required to acquire a license to rent out a property. Inquire about this from people who have rented out property in your area to understand the permits needed. In addition, since this is an income stream, understand how much tax you’ll be required to pay once you start getting tenants.

Once you rent out a property, you have several responsibilities. This includes staying on top of repair and maintenance, paying landlord insurance, and collecting rent. To ensure a smooth run as a landlord, take your responsibilities seriously.

Make Smart Improvements

When considering home improvements for a rental, factor in your tenants and how to increase your return. Focus on smart improvements that will appeal to potential tenants. For instance, if you’re targeting young families, install easy-to-clean floors and benchtops. Avoid making costly improvements that will take a long time before you get a return on your investment.

Find the Right Tenants

You must avoid discrimination when selecting tenants. You must follow fair housing laws. If you break them, you might face serious consequences. Understand local and federal laws that apply to you, before turning away any potential tenants.

That said, before signing a contract with a potential client, screen them to see if they’re the right fit. This includes performing a credit and background check, getting referrals from previous landlords, and asking for pay stubs to ensure they can make the monthly payments.

Look Into Long-Term Vs Short Term Rentals

You can consider renting out your home either on a long-term or short-term basis. Long-term rentals involve leasing out your home for approximately a year, while short-term rentals might involve periods as short as a week. Long-term rentals are often a better idea if you’re looking for a constant flow of income. However, short-term rentals are also great if the property is in an area where demand for short-term rentals is high. Both options have pros and cons, so it will depend on your preference.

These considerations are crucial when deciding to rent out property. While there are several things to consider, understanding laws that apply to you and your responsibilities as a landlord will help you have an easy time.