Your Permanent Change of Station (PCS) orders have arrived, and you’ve weighed your options regarding whether you should rent or sell. After deciding to take on the challenge and be a military landlord, it’s time to gather the essential information you’ll need to know regarding how to manage a rental property yourself.
While there are numerous benefits to renting, it is essential to go into being a landlord with the mindset that no one is going to treat your home with the level of love and care that you did. Therefore, you should set yourself up for success by anticipating potential issues and taking measures to intercept those before they even happen.
Here are 5 tips if you are thinking about becoming a military landlord:
1. Address Minor Repairs
Before your tenants even move in, make sure all of those “little” repairs are addressed. As a homeowner, you may have tolerated a broken cabinet door or a leaky faucet. However, these things will be glaringly obvious and irritating to a renter expecting close to perfection.
By fixing these small things from the beginning, you’ll also be able to avoid hefty repair bills later on. Remember, many minor issues can lead to much bigger problems with the house later on.
Tip: Steer clear of potential liability issues by brushing up on these tips for Backyard Safety for Military Landlords, Renters and Homeowners.
2. Have a Rent Lease Agreement
As a military landlord, it is understandable to naturally trust any potential military tenants who may rent from you. However, it is a colossal mistake to rent to anyone without a property lease. Even if you find yourself renting to a friend or acquaintance, make it a point to draft up a thorough lease agreement.
When it comes to money, even friends and family relationships can become strained very quickly. Having this paperwork in place will allow you to lean on the agreed-upon policies if something does happen to go wrong.
Consulting a real estate attorney is a great start if you’re not sure about where to begin with a rent lease agreement. You can also do a quick search to find your state’s standards for leases to ensure you are aligning your expectations with local regulations.
3. Appropriately Price Your Rental Property
Knowing how to price your rental property is crucial to the overall success of your operation. To get started, you can conduct a bit of research on the cost of rentals in your area that are of similar size and accommodations as your property. This will give you a good starting idea of how much you can reasonably charge tenants for access to your investment.
As you set your price, it is also important to keep in mind that you will be responsible for the overall maintenance of the home. Therefore, you don’t want the tenant to only be covering the cost of the mortgage. Here are some costs to consider when pricing your rental property:
- Yearly maintenance costs
- Property taxes
- Monthly mortgage payments
- Pest control
- Homeowner Association (HOA) fees (if applicable)
- Lawn care and landscaping (if applicable)
Anticipating these extra costs throughout the year will help you set a rental price that is fair to both you and your tenant. By not considering these factors, you run the risk of taking a loss if the cost of maintaining the property exceeds how much you are asking for in rent.
More Like This: Still not comfortable with choosing a price point for your rental? You may want to consider hiring the help of a property manager. Review How To Hire A Property Manager for Military Housing!
4. Set Expectations for Renters
Your lease should thoroughly establish expectations for both you, as the military landlord, and your tenants. Anything that renters are expected to pay for should be highlighted in this document and signed by all tenants.
This is because, without proper documentation, renters could expect you to pay for their utilities, provide lawn care services, change batteries and even supply light bulbs. Potentially, they could nickel-and-dime you until the rent they pay doesn’t balance out the costs you could have avoided if you had just established a comprehensive lease agreement.
Make sure it is outlined when rent is due each month, and any additional charges renters can expect if they are late in paying rent. You can prevent any potential conflicts by ensuring your lease agreement covers all the bases.
5. Set Up a Rental Bank Account
Wherever you decide to send your rental income, you must keep track of how much you make from your investment throughout the year. Therefore, it’s recommended to set up a separate savings and checking account to handle all of your rental income.
Having your rental income separate from other forms of income will make tax season much easier for you or your accountant. By doing this, you will also be able to easily see how much you are making and even spending on that rental property.
Become a Military Landlord
No matter if you are staying in town or heading across the country, self-managing a rental is doable with the right mindset and preparation. As your tenants move in and you get busy with everyday life, don’t forget to check in on your renters, accept their calls for assistance, and conduct routine maintenance checks of the property.
With careful planning, renting can become a viable source of income for your military family. Whether you are renting at your new PCS location or buying, you can find excellent military housing resources here at AHRN. Sign up today to get started!