Renting Out Your Home in Sacramento: Everything You Should Consider
Thinking of renting out your house in Sacramento? Well, from a financial standpoint, it can be a great idea to have a rental business. Having an additional income stream from rent can help you, as a landlord, diversify your earnings, pay down your mortgage faster, and help you achieve financial independence faster.
However, renting out a property goes beyond just cashing out the rent income check from your tenants every month. In fact, becoming a landlord can be a daunting and stressful task. Landlords need to know about collecting a security deposit, drafting a lease, marketing your rental listing, screening tenants, setting your rent price, and creating a property management plan.
If this is your first time renting out your home, the following are important things you should know about.
7 Tips for Renting Out a House in Sacramento
1. Make a Financial Plan
Landlords must have a financial plan before welcoming potential tenants. This will help you know whether or not to rent out your home will be financially worthwhile or not. For your investment to be profitable, the rental income from renting must exceed the expenses. So, make sure to factor in things like mortgage payments, maintenance, repairs and upgrades, taxes and insurance.
Rental income is taxable income, but a lot of expenses can be written off. Make sure you keep track of expenses and keep records so you're ready come tax season.
2. Calculate the Rental Rate
Before you rent out your Sacramento rental property, you’ll need to calculate and determine the rental rate. How much monthly rent you, the landlord, charges potential tenants can be the difference between having a vacant unit and having stable income every month. When figuring out how much rent money to charge, a landlords goal should be to find a rental price that is neither too high nor too low.
There are two ways to do this. The first option is that the landlord can do it on their own. Landlords can conduct neighborhood research or interview area landlords to figure out how much similar rental properties rent for. The other option is to simply hire a professional, such as a property management firm like Peak Residental.
3. Draft a Lease or Rental Agreement
A lease is a crucial document for landlords. The lease can help minimize confusion or misunderstanding between you and your tenant during a tenancy.
There are certain terms that a landlord should include to make foolproof lease agreements. For example:
- The rent price, when rent becomes late, and where the money is payable
- The security deposit amount
- Whether pets are allowed
- Who is responsible for certain maintenance requests at the rental home
- The limits of occupancy
- Requirements before breaking a lease
- The landlord’s right of entry
- Behaviors that will warrant the eviction of the tenants
It’s crucial that the lease agreement is legally binding. Once you’ve drafted the lease agreement, have a professional go through it to ensure it abides by all local laws. Alternatively, just hire a qualified management company to draft the lease for you.
4. Have a Management Plan in Place
Being a landlord comes with a lot of responsibilities. Tenants might call at 2 A.M. about a pressing maintenance issue, for example. You also need to know what your responsibilities are regarding providing habitable living and knowing you rent our your home to a high maintenance tenant. If these responsibilities seem daunting, then consider hiring a professional to do them for you. An experienced management company can help you meet all your responsibilities under the lease agreement.
5. Know What the Law Says About the Landlord-Tenant Relationship
Just like other states across the country, California has a landlord-tenant law in place. As a landlord, you must abide by it. As a landlord, you have an obligation to respect your tenant’s privacy and fully understand and the landlord tenant laws.
Before entry, you must always notify your tenant beforehand. Specifically, California law requires landlords to give “reasonable notice” prior to entry. 24 hours is presumed by law to be reasonable. What’s more, the reason for the entry must be reasonable as well. The following are legitimate reasons why a landlord in California may want to enter the tenant's unit.
- To show the unit to a potential tenant, buyers or lenders
- To show the rental house to workers or contractors
- In an emergency
- To conduct the necessary or agreed upon repairs
- During walk-through property inspections to evaluate any damage done to the unit
No notice is required to enter during an emergency, under court orders or in the case of property abandonment by the tenant. Besides the law on landlord entry, there are a lot of other laws that you also have to abide by. They include the Fair Housing Act, the Warranty of Habitability, Security Deposit Law, and the Fair Credit Reporting Act.
6. Ensure the Property Is in a Good State of Repair
You’ll want to make sure that your property is attractive to market to a potential tenant. If it’s in a dire state of disrepair, you’ll have a hard time convincing anyone to rent it. And the longer the unit remains vacant, the more money you’ll lose and the larger the chance that squatters may try to occupy the unit.
So, go round the property and check that everything is up to par. Are lights and switches working as they should? Are there any leaky faucets? Is the heating and cooling system functioning properly? What about the smoke and carbon monoxide detectors? Try to discourage squatters, but be sure to know their rights if you do end up encountering some.
7. Have a Plan on How You’re Going to Market the Property
To avoid vacancies, marketing your property properly is essential. Knowing your target demographic can help you tailor your marketing strategy to reach as many high quality tenants as possible.
Before marketing it, stage it to ensure it looks its best. Then, use a combination of both traditional and conventional marketing tactics to get the word out.
Bottom Line
There you have it. Seven tips for successfully renting out a Sacramento rental home. If you find it daunting, hire Peak Residential, Inc. Property Management! Our experienced property management company offers a comprehensive suite of services can help you in all aspects from marketing to collecting rent.
Our property management company will make renting your home a dream!
Peak Residential, Inc.
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