If you’re like many property owners, you want to use your investment property to make rental income. But before you can get to the cash flow part, you likely need to rehab and prepare the rental property for potential tenants.
Rehabbing a home isn’t the same as preparing a home for rental, though. Not all homes require rehabbing, but all rental properties must be prepared for prospective renters.
There’s a lot to know about owning rental property, and landlords must understand their rights and tenants’ rights to meet any legal requirements when preparing a home for a new renter.
These details can guide you through rehabbing your residential rental property as a real estate investor and getting it ready for new tenants so you can get your home on to the rental market sooner—and potentially increase the monthly rent.
How To Rehab Your Rental Property
Once you’ve purchased a rental home, it’s crucial to make the necessary repairs and updates to ensure it’s safe and meets local rent regulations for tenants.
Starting with a thorough plan is essential, especially when setting a rehab budget. Factor in all anticipated work and material costs, and if possible, overestimate to accommodate any unexpected expenses.
How To Prepare a Home for Renters
Now that you’ve completed your rental home rehab, you can start preparing the property for renters. This is the stage where you add beautification to the rental house, like planting a bed of fresh flowers or making sure the windows sparkle.
There are things you can do in each room of the house to get it ready for the next tenant that could also help increase the monthly rent:
Bedrooms
When a tenant moves out, you may have to clean the carpets in the bedrooms. Some landlords put hardwood floors in the bedrooms to avoid cleaning carpets regularly, but hardwood floors need to be cleaned as well, and they can get scratched and scuffed. You may also need to touch up the paint and fill holes in the walls caused by hanging pictures and hooks.
Inspect the bedroom windows to ensure they open and close and that screens are in place. If the windows need coverings, you may have to replace these before new tenants move in. Touch up moldings and baseboards, and ensure the door functions and looks good.
Bathrooms
In a rental property, prepare the bathrooms by ensuring the faucets work and there are no leaks. Check to make sure the toilet looks clean and functions properly. Replacing broken or chipped mirrors or sinks is an inexpensive way to make a bathroom look more appealing to potential renters.
You can also do preventative maintenance while you’re preparing the property. Look under the cabinets in the bathrooms to inspect the pipes and ensure that the sinks are draining as they should. Make sure all the outlets and switches work. Hire a professional electrician or plumber if any issues or concerns need attention.
Living and family rooms
Living and family rooms often get a lot of wear and tear because they can be the most-used rooms in a house. It’s not just a less-than-ideal tenant who can cause property damage.
Accidents happen to even the best tenants, and these accidents might not leave your property in the same condition after you rent it out. Unfortunately, the living areas can get the brunt of the issues that renters cause.
So you need to be ready to properly prepare these rooms for new tenants when you’re a landlord. You may have to clean or replace carpets, apply a fresh coat of paint to the walls, clean or replace window coverings, and repair doors or windows that don’t work. You can also check that all the light bulbs in any lighting fixtures are working properly.
Kitchen
The kitchen is another room renters use a lot. When you prepare the kitchen for the next renter, you’ll want to check that the appliances are all working. Things to check include:
- Is the fridge getting cold?
- Does the freezer make ice?
- Can the oven get hot?
- Do all the burners on the stove work?
Make sure you check all of these things as you look over the kitchen at your property.
New appliances aren’t cheap, so getting landlord insurance or a home warranty can sometimes be helpful. These can offset the costs of making expensive repairs on a rental property. Still, you should talk to a landlord insurance agent about getting the coverage you need and want so that your policy or warranty covers appliances.
You might need to replace the linoleum if it’s damaged, but a good scrubbing should usually do the trick. Look over the cabinets, and open all the doors and drawers to ensure they work. Test the smoke and carbon monoxide detectors, and replace them if needed—you can do this throughout the house.
Exterior
Once you’ve completed preparing the home’s interior for rental, you can move to the property’s exterior.
Here are some important tasks:
- Clean up and remove any junk or garbage that previous tenants may have left.
- Check the siding to make sure it’s clean and free of damage.
- Examine the windows, looking for water damage, leaks, and broken glass.
- If there’s a chimney, have it cleaned, and make sure it’s structurally sound.
Add curb appeal to the home by trimming bushes, cutting trees, planting flowers, or putting potted plants around the property. People will judge a home within the first few minutes of seeing it, so sprucing up the exterior won’t cost much money, but could attract a tenant to the place you’re renting sooner.
Bonus areas
If your rental property has a garage, shed, pet area, or another bonus spot that not all rentals have, you must also prepare these areas for rent. Any parts of the property included in the lease agreement should be ready for a renter.
You may need to have the floor cleaned or repaired in the garage, while a shed may be full of someone’s old yard tools or boxes. Get rid of any signs of past tenants who may have been renting the house.
How To List Your Property
Listing your rental property and finding a tenant is the next step in preparing it to rent. This step takes some work and investigation. You’ll need to know where to set your rental rate, whether you need to include lawn care, and how to screen tenants.
Most landlords take care of maintenance, repairs, and property management tasks independently until they own a few other rentals. But a landlord can use these tips to help them list their property and find a tenant who will pay the monthly rent.
Take photos
Most people seeking housing today do it online by looking at photos, so you’ll want to ensure you have stellar property images. Hiring a professional real estate photographer who knows the current market may even be worthwhile. They can photograph the features of your house that they know are popular right now to help it stand out.
Use marketing tools
There are several ways a landlord can advertise their rental properties. Knowing the best marketing tools for your unit can help you target the people with the most interest in renting your house. Social media is an excellent tool for marketing real estate, but traditional methods like putting a sign in the yard can also be surprisingly helpful.
How and where you market a home for rent depends on the home’s location and rental rate. You may need to try various marketing tools before you find the ones that work for you.
How to Find the Right Tenants
Selecting the right tenants for your rental property is essential for a stress-free, profitable landlord experience. Making the right choice can lead to long-term rental relationships, timely payments, and well-maintained homes, while the opposite can result in costly and time-consuming challenges.
Screen applicants
Before renting a property, landlords must screen tenants—such as through a background check service and a comprehensive rental application—to weed out anyone who may not pay rent or are more likely to damage a house. Of course, you also have to prohibit discrimination when finding a prospective tenant, so make sure you’re familiar with laws for landlords and tenants when screening tenants.
Understand landlord tenant law
Being well versed in the landlord tenant laws of your city is critical to your long-term success. These laws, such as the Fair Housing Act, not only dictate the rights and obligations of both parties but also provide a framework for resolving disputes that may arise during the tenure of the lease.
A thorough comprehension of these regulations ensures that you maintain a fair, lawful relationship with your tenants. Ignorance or negligence in this area can lead to legal complications, strained relationships, and potential financial penalties.
Familiarizing yourself with local rental laws can save you from costly mistakes and solidify your reputation as a trustworthy and professional landlord.
Create a rental agreement
A rental or lease agreement is a contract between a renter and a landlord stating what the tenant will pay each month and what the homeowner provides. The lease agreement needs to include the rental rate, the lease’s duration, whether pets are allowed, and all the details pertinent to the real estate transaction.
You can use a generic rental or lease agreement, but have a lawyer look it over to ensure the lease can protect you and your property. Without this, should something go wrong, your rental income is at risk.
Property Manager vs. Self-Management
You must decide whether to self-manage your properties or work with a property manager or management company. Doing the job yourself means you need a good grasp of landlord-tenant laws, eviction laws, and the legal issues that could arise from a lease. You’ll also be responsible for collecting rent, doing maintenance, taking care of repairs, marketing, and renting the unit.
A property manager handles most of the details associated with renting a house. Many property management companies can tailor their services to your needs by offering some or all of what you want. A property management company can write a lease agreement for prospective tenants, handle the rent money, and hire the lawn care service.
A property manager also knows how to navigate the rental market, and their services can be well worth the money. Yes, it costs money to hire a property manager, but it can actually boost your rental income over the long run.
Final Thoughts
Preparing your home for renters takes time if you decide to manage the property yourself.
You might want to manage your rental property if you only own a few, but as you grow your real estate business, it may be worth considering working with a property management company. You can let them help you prepare a home for renters, so you can continue your wealth-building strategy.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
