About to start renting out my first home, where do I even start?

Question

Hello all, my name is Terry. I'm brand new to the forums as well as to investing in real estate. I am a travel nurse and have owned the mortgage on my house since 2017. With all of my travels, it just sits neglected with an entirely empty upstairs 2 bedroom 1 bath single family living space. I'm going to be getting some contractor work done to make the space tenant worthy in the next few months. In the meantime, I would like to learn as much as I can in regards to taking care of this 'rental' myself. I know nothing of drawing up a lease, how to estimate rent, the best place to advertise, etc. Any help would be much appreciated!

Charlie Beneke · Answer

@Terry Watson I would suggest going with who you have or want to build a relationship with. A property manager and a realtor can both do the service. They will both charge around the same price which would be one months rent.

Shai Flax · Answer

@Terry Watson Sounds like a good plan! I'd recommend that you'll look into getting reimbursed for the utilities. some places won't allow that (like where I invest).I just read that someone wrote about a company that put meters in an undivided MF on water and electricity, that might be a good solution for you. If you want I can look at the name of the company for you.

Danielle Jackson · Answer

Great advice so far. Welcome to the forums and wishing you the best of luck!

Michael Noto · Answer

@Terry Watson Biggerpockets has a free book on how to rent your home by @Mindy Jensen. Starting there would be my advice.

Charlie Beneke · Answer

@Terry Watson If you want a hands off experience I would suggest getting a realtor to lease out the apartment space for you. That way all you need to do is look at the applicants’ credit/background check and approve or disapprove them. The rental laws are different for each state but to take this one step at a time as your contractor fixes the unit up take some pictures of the unit that is nice and will stay. Look at other 2 bed 1 bath units in your area through rentometer.com, Zillow, Domu and different brokerage websites. Once you find enough properties that are like yours set a price. Now, in looking at those different units you should have seen requirements tenants have to meet to qualify. Form your own requirements and stick with it! Now post on Zillow, domu and multiple websites with your listing, make sure to list the benefits of your unit and its location. Now is the fun part where ppl will contact you about your listing. Make sure to weed out the serious ones by asking them upfront if they meet your requirements. If they do set up a time for them to see the unit. I’d suggest having designated showing hours so it’s easier to schedule for you. Once a tenant likes it get them to complete a background and credit check. If that works you can ask the agent you bought your house from for a lease from her brokerage. Make sure to read it carefully and that you have everything you want in there. You can also search online for one or go to a lawyer. Make sure you have the correct disclosures for your city and state and then have them sign and submit first months rent and a security deposit or move in fee and then you sign your portion of the lease!

Shai Flax · Answer

Hi @Terry Watson, are you going to rent the whole property or just the rooms that you are not using?If the whole property, I would check the current house for rent (comparable to yours) in Zillow and Realtor. Also, you'll have a few tries in Rentometer that analyze the rents in your area.If you are trying to rent by the room I would def reach out to investors in the area that are doing this strategy to know the prices since it's a bit more tricky. Maybe a great agent that helps investors will know the prices, you can offer him/her a compensation for their time.

Theresa Harris · Answer

Look online to see what comparable rooms are renting for in your area. It will also give you a chance to see where to advertize.

Terry Watson · Answer

@Shai Flax Like I mentioned above, I was thinking of including everything into the rental price. At this time though, I'm planning on living in the basement area myself (when I'm there), so I don't really need to split anything as of yet. I'm usually out travelling for work most of the time anyway, the only ones that would be charging up the bill would be the renters. Maybe if I decide to move my things out and rent out the lower level as well I can worry about putting meters in. Thanks for the info though!

Terry Watson · Answer

@Charlie Beneke Thanks for the info. I was thinking about doing this first one myself since I am still technically living in the house. Once I start branching off into more rental properties I definitely plan on enlisting a PM to help manage!

Terry Watson · Answer

@Theresa Harris How much do I charge per square foot? I was thinking about just tallying up everything that would be included into the rent and working that into the lease as a 'variable' charge each month depending on the utilities, so that is in line with what you mentioned above. Thanks for the pointers!