Step 8 - Attack
Most investors consider this is the easy part. Warning! Way wrong. You made an investment. Think about this question for a minute. Is it really the house that pays you? No. It's the tenant! The house is what you have to offer a tenant with solid income and a desire to keep the home nice. Until you've gone through the entire process of pricing, marketing, selling, leasing, and handing the keys to a new resident, you really don't know what you are getting into. Gone are the days when a smile and a firm handshake were all that were needed to be confident in your arrangement. The smart investor must have a lease contract that protects not only their own rights, but is enforceable under local, county, state, and federal law.
Should you advertise using a simple "For Rent" yard sign? Sometimes. But othertimes, that's the exact wrong thing to do. What about craigslist? We usually try to avoid craigslist. There's just too many scammers out there waiting to take advantage of your listing. There are much better alternatives to sites like that, and most of them are free! Other questions you'll have to answer:
- Do you have an application ready?
- What information are you allowed to gather when someone applies?
- Should you charge a fee to apply?
- Is an application fee refundable?
- How do you perform a background check?
- Do you need permission from the applicant before performing a background check?
- What questions do you ask of an applicant without breaking any laws unknowingly?
- How much security deposit can you ask for?
- How do you hold a security deposit? In a standard checking or savings account?
- What can a security deposit be used for?
- Is there a standard pet policy in place?
- Can residents redecorate to their liking?
- Are they allowed house guests? For how long?
- What, if any, ammendments should be in your lease?
- How long should I make the lease for?
- Is the rent fair and marketable?
- Can the applicant afford it for the entire lease period?
- What are the ways a lease can be terminated?
- What is your recourse? What is their recourse?
- What are the way a lease can be breached?
- Should I allow for a renewal?
There are countless scenarios to prepare for before even speaking with a potential tenant/applicant. If you've followed our guidance up to this point, TriStone Group will be able to provide these answers and more for you as you prepare to turn this house into a home. We're really good at this part.