Content of the material
- What is a Rental History Report?
- 6. Accept rental applications
- First-time renter requirements
- How Do You Know if a Place Is Renting?
- Ask Neighbors in Nearby Buildings
- Determining the Rent
- 4. Host a rental open house
- The bottom line
- Check for Any Notices of Default
- Real estate brokerage fee
- County Records Office
- Post navigation
What is a Rental History Report?
A rental history report is a list of previous addresses that a tenant has rented from, along with contact information of the landlord or property manager at the time. It is likely that the credit report will list out previous addresses for the applicant, but it is a good idea to ask the applicant for a complete list of addresses and contact information for previous landlords.
6. Accept rental applications
It’s important to treat all applicants equally. Invite all interested renters to complete a rental application. Zillow Rental Manager’s application and screening tool simplifies the application process and includes background and credit screening. The tool is free for landlords, and each applicant only pays a $29 fee to use the tool for 30 days. When accepting applications:
- Put a time and date stamp on applications as you receive them — whether in person, by email or online.
- Use the same application, questions and requirements for everyone who applies to rent your property.
- Carefully check for obvious inconsistencies within each application.
- Create a spreadsheet of each application you receive so you can track the progress and compare qualifications.
If you have more than a few rental properties or many applicants, you may benefit from a lead tracking system like Zillow Rental Manager. It can help you stay organized and help you match prospective tenants to available properties — and you can communicate directly with applicants through Zillow Rental Manager.
First-time renter requirements
When someone is renting for the first time, landlords will often want a guarantor to sign the lease along with the tenant. A guarantor is an individual who guarantees a renter's payment on a lease. If you are unable to find a guarantor, being able to prove ample savings and a strong credit score could convince the landlord to waive a guarantor. Renting from a smaller company or individual landlord may also work in your favor.
If you have been approved to move into a new building or home, the landlord or property manager will ask you to sign a lease. "Read your lease! It's a legally binding document you are signing. Don't be afraid of the legalise," said Bera.
"Anything that looks shoddy, unprofessional, or incomplete is a huge red flag. The lease should be detailed and comprehensive," Andrews said. He recommends reviewing every page within the lease. "I think it's best to have a comprehensive understanding of the lease so you know what you're getting into. Through that process, things that are fishy or disagreeable to you will come out," he added.
Before you sign anything, read it at least twice. Penalties for late rent are common. There could be clauses in the lease that prevent you from subletting the apartment and specific time frames you must adhere to if you want to break the lease early. Some landlords will also include clauses about the number of guests tenants can have over and the duration of their stay. It can also help to have a friend reread the lease to make sure you didn't miss anything. If you have a friend or family member who is a lawyer, even better.
How Do You Know if a Place Is Renting?
If you are new to an area, the best way to find out if a home is renting or for sale is by searching through your county’s list of property owners.
People who rent their homes may do so because they desire privacy and wish to avoid scrutiny from neighbors or potential buyers. They also may not want information about rental status shared with current or future homeowners.
It’s important for people looking at purchasing property in the neighborhood to tread carefully when asking questions about rental status since this could be construed as discrimination against renters.
It can help both sellers and renters in the same community if real estate purchasers show respect toward renting in their neighborhood.
If the house is in fact being rented, this shows that it’s desirable living in the area which can positively impact your home value!
A great way to maintain community connections when moving into a new area is by reaching out to neighbors.
This can help not only you but also them so everyone feels more connected within the community.
You might also enjoy our post on Does My Neighbor Have a Mortgage?
Ask Neighbors in Nearby Buildings
Other people and businesses in the neighborhood may know something about the reputation of the building and its tenants, landlord, or manager. Be sure to ask about crime in the neighborhood—both on the street and apartment break-ins, as well as other incidents requiring a police response. Ask if tenants seem to stay more than a year—if so, that’s the mark of a well-run building.
Determining the Rent
How is the potential rent determined? You are going to need to make an informed guess. Don’t get carried away with overly optimistic assumptions. Setting the rent too high and ending up with an empty unit for months quickly chips away at the overall profit. Start with the average rent for the neighborhood and work from there. Consider whether your place is worth a bit more or a bit less, and why.
To figure out if the rent number works for you as an investor, calculate what the property will actually cost you. Subtract your expected monthly mortgage payment, property taxes divided by 12 months, insurance costs divided by 12, and a generous allowance for maintenance and repairs.
Don’t underestimate the costs to maintain the property. These expenses depend on the property’s age and how much upkeep you plan to do yourself. A newer building probably will require less work than an older one. An apartment in a retirement community likely would not be subject to the same amount of damage as off-campus college housing.
Doing your own repairs cuts costs considerably, but it also means being on call 24-7 for emergencies. Another option is to hire a property management firm, which would handle everything from broken toilets to collecting rent each month. Expect to pay around 10% of the gross rental income for this service.
If all these figures come out even or, better yet, with a little money left, you can now get your real estate agent to submit an offer.
4. Host a rental open house
Your rental ads should encourage interested renters to connect with you. Make sure to respond promptly to any questions and follow up on requests to tour the property. According to the Zillow Group Report, 60% of renters find it important to tour a home before signing a lease — and 71% also said that after inquiring about a listing, they expect to hear back from the landlord or property manager within 24 hours.
Consider hosting an open house or scheduling individual showings to meet prospective tenants in person. In-person tours give potential renters the opportunity to see the home for themselves, and they can give you an initial impression of whether the person will be a responsible tenant. Use these tips to help guide your showing:
- Know your property’s unique selling points.
- Have an idea of what you’re willing to negotiate — for example: pets, fees or move-in date.
- Understand fair housing laws so you know what criteria you can or cannot use to deny an applicant.
- Have specific, consistent criteria so you can streamline your tenant screening process.
- Be upfront about the required income-to-rent ratio, screening requirements and policies — and be prepared to answer questions about your requirements.
The bottom line
Finding a rental home can be a bit more complicated than finding an apartment, but there are several websites to help you out. Visit a few and play around with their filters to develop a list of homes that are worth visiting in person.
Check for Any Notices of Default
If you’re concerned about the landlord’s financial stability, find out whether the property you’re considering is the subject of a notice of default (the first public step toward foreclosure). Banks and other lenders must file these notices, in the courthouse of the county in which the property is located, when the owner has failed to make payments on a loan or mortgage for a specified number of months (two is common). Obviously, renting a property that’s liable to be foreclosed upon during your tenancy is not a good idea—even if you get to stay, you may end up with an owner (especially if it’s the bank itself) who will not be a conscientious landlord.
Real estate brokerage fee
There is a much bigger expense to factor into a rental budget when you are working with a real estate broker — a brokerage fee if you end up signing a lease. When beginning a rental search, you will want to make sure you have enough saved to cover this fee, which can be high.
A broker's fee is like a finder's fee, typically, around one month's rent, or 10% to 15% of the annual lease. While you might be able to find an apartment without a broker, it gets tougher in bigger cities, Andrews said. Most online housing platforms allow you to filter a search for apartments that don't require payment of a broker fee.
While a real estate market as hot as the current one gives less leverage to the renter, relying on personal networks, social media and online listing boards can be helpful if you want to avoid a fee (though be careful with online listing boards since brokers use them as well). In some smaller cities and towns, you can do your own searching, driving around neighborhoods you are targeting and looking for rental signs right out front of properties.
However you search for an apartment, make sure to ask any real estate professional you do end up working with if there is a broker fee involved because, unlike a security deposit, you won't get this back.
County Records Office
Go to your local court house and see if you can get access to the public documents about the house. Most municipalities have records easily accessible, but some court houses will charge you a fee for the service.
Call the town office and let them know you would like to obtain information about a certain tax parcel. The staff will be able to point you in the right direction for the information.
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