Renting out your house is a smart investment decision in the present financial scenario. While selling a house in India can be a difficult proposition for the landlord, the same cannot be said about renting a property! With the massive exodus of youth population from the villages and towns to the megacities, rental properties are always in demand and they offer handsome earning opportunities. Whether you are after some extra money each month, want to pay off your home loan debts or seek an alternative to the frustrating home selling process – property rentals are your ideal options. Having said, not everybody has a great experience of renting out a property. Successful landlords have a secret recipe to manage all the ends, and as a newbie, you are not likely to know that. So, here are some tips you should keep in mind before renting your house.
#1. Choose a Good Tenant
There are many ways of finding a good tenant. You can advertise in newspapers or online. You can even spread the word among your friends, relatives, and co-workers. Whoever approaches you should be ready to fill out a detailed information form. It is your duty to create such a form. The form should contain certain basic information such as the name of the prospective tenant, employer, salary, name & details of previous landlords and references for personal verification. Additionally, you might ask for the Pan Card, Aadhar Card details, bank account numbers for verification purposes. It is also a good idea to get a No Objection Certificate signed by the prospective tenant giving you permission to check credit reports as well as criminal history checks. Once you get all these details, it is time for you to act. Pick up the phone and start making some calls. You may start with the previous landlords and hear what they have to say about the person. Next, contact the employers and learn more about the person. You cannot rest as of yet, for you need to contact the Police Station (in question) and inquire whether the person has any criminal history. Once all this is done, you might even want to check the credit reports of the person. All this information would help you select the best tenant for your property.
#2. Set Reasonable Rental Rates
Ok, so your bank is charging high EMI on home loans each month, and your primary motive for renting is to meet that money. But, in the process do not make the mistake of asking for too high rental rates from the prospective tenants. You have to, first of all, look through the newspaper ads, rental signboards and online ads for property rentals in your area. This bit of research will help you grasp the existing rental rates. Try to stay very realistic about your rental incomes, the lesser you charge quicker your property would be filled (unless of course, you have a really great property).
#3. Cover your bases with a good Rent Contract
Property experts’ advise against using the general rent contract papers that are available at the Notary offices. These contracts do not cover all your bases and keep gates open for future conflicts. This is why you should contact an experienced real estate lawyer and get a customized rent agreement prepared for yourself. Now, the next question would be: what to have in this customized rent contract? Here are some details that you might like to include.
- Lease term: Your contract paper should clearly delineate the lease term. If it is an annual arrangement then clearly mention the beginning and closing date of the contract.
- Security deposit: The contract should also mention the amount of security deposit that needs to be paid before occupation. Mostly, a month’s rent is an adequate security deposit.
- Due Dates: You might also want to mention the due dates for paying rent every month. Most landlords are in favor of getting their rents within the first ten days of a month. You might also include a clause for penalties in case the tenant fails to pay the rent within the due date.
- Repairs: This is very important. During the tenant’s stay at your property, there might be many damages incurred. While some would be a part of the maintenance tasks and their costs would have to be borne by you. There would be others that are caused by the negligence or repeated use of the tenant. In such instances, the tenant will have to pay for the repairs. The terms of repair must be clearly stated so that any future debates might be avoided.
- Tenant’s List: The contract paper should not only carry the name of the tenant but the entire family residing in your house. It should further carry the age and relationship (with the main tenant) details. These are sometimes very important for the Housing Society.
- Rules and Norms for the Occupants: You should also mention certain rules that the tenants need to follow. You might include acceptable noise levels, behavioural standards, neighbourly conduct, smoking, pet policies, etc. within the contract.
- Eviction Terms: The tenant should have a clear understanding of the eviction terms. Sudden evictions are never pleasant but you can gain an upper hand with clear eviction terms. Some of the terms in this respect include failure to pay rents, damage to property, etc.
#4. Opt for Good Insurance
While it is good to have a home insurance policy for a property you are residing in, it is imperative to have one if you are thinking of renting the property. There are many good home insurance policies that cover your property against damages and losses. In case of fire, your structural and financial damages would be covered by such insurance plans. What’s more, a part of the medical expenses incurred due to property damage would also be covered by the insurance companies.
With these arrangements in place, you can stay protected as a landlord. So, have fun renting, all you landlords out there!