Renting Your Property For Extra Income? Don’t Make These Mistakes

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concept of mortgage and savings

Make no mistake: renting out your property, or a room within it, can be a great way to top up your finances and make paying your mortgage that much easier. However, if you’re not careful, then you might find that it’s more trouble than it’s worth. As such, you need to be taking steps to ensure that the rental process is flawless. Here are five things you’ll need to bear in mind before you get a tenant on board.

 

Make Sure It’s Right For You

Before you do anything, you’ll need to ensure that becoming a landlord is the right thing for you. There’s much more that goes into being a landlord than simply collecting a check each month; if you only have eyes on the financial prize, then you’ll need to reconsider your options because you’ll soon discover that it’s not that straightforward. Have a clear idea of everything that’s involved in renting out a property, and then make an informed decision. If everything sounds good, then go ahead.

 

 

The Right Tenant

When you’re a landlord, you can’t treat every potential tenant as a friend you haven’t met yet. This is not an opportunity to test how much faith you should put in the people of the world. Even those people who seem like they would be great tenants can end up being more hassle than you could imagine. As such, you need to be conducting thorough background checks on your potential tenants. Remember: this is your property, and it’ll be doubly important if they’ll be living in your home with your family. It’s easy enough to conduct a background check, and it might be the difference between getting a reliable tenant and someone you wish you’d never met.

 

 

Have a Contract

Even if your tenant passes your background check with flying colors, it’s still important that you have a contract in place. Misunderstandings can happen with anyone, no matter how friendly and respectable they are, and by having a contract, you’ll be protecting both yourself and them. The contract doesn’t have to complicated: a simple document outlining what the rent does and doesn’t cover, the length of the tenancy, eviction circumstances, and house rules should suffice.

 

 

All Above Board

You’re not just dealing with the tenant when you become a landlord: you’re also creating another link with the government. There are rules as to what a landlord must do, and it’s up to you to ensure you’re following those rules. You’ll also need to declare any income with the taxman; most people fail to do this, hence the Let Property Campaign, which was set up to resolve the tax issues surrounding let properties. If you fail to declare your income from renting a property, you may be hit with a big tax bill and fine!

 

Having a Plan

Finally, make sure you have a plan when it comes to your rental property. What’s your long-term strategy? Is this a short-term option, or are you planning to make this an integral part of your income?

 

 

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