Insurance

There are a lot of things to consider and many more preparations to be done before you launch your own property rental business. Below is a check list that will help you to ensure a smooth and profitable outcome from your business.

Follow The Law Of The Land- Find out about what laws govern the rentals of your type in your area, follow covenants, conditions, and restrictions. Read carefully any such documents that lay down the rules for the area where your home is situated and sign whatever contracts/ agreements are required BEFORE you enter into contract with your tenants.

License and Permits - ensure that you have completed all the necessary paperwork and have all the required licenses and permits to rent your home in the area where it is situated.

Safety regulations - each state or province have their own specifications for safety. Ensure that you are following rules set out for your home as a rental.

Insurance - insure your home, purchase contents insurance as well as the tenant/rental insurance. It is always better to pay a little extra every year than find yourself at the mercy of fate, when it strikes.

Advertising - you will find a very detailed advertising strategy for your rental home later in this book, however here are just some of the highlights:

a. Research and decide what your best options for advertising would be.

b. Enroll in some of the most popular online rental websites where you could advertise your property.

c. Have a copy drawn up, which you could offer to other websites, and circulate both in the brick-and-mortar world as well as virtual world.

d. Take photographs of your property in the morning, midday and at night to make a stunning portfolio; have a walk-through-the-house virtual tour ready for whenever you need.

e. Create a website, if possible and have your property showcased there; it will be very easy to provide the link to your potential tenants via email or other means.

f. Tell your friends, colleagues and relatives about your property. It will make a great word-of-mouth advertisement.

Rental agreement - you need to have a standardized rental agreement. Check with you local real estate board, they often have very thorough residential rental agreement available for a small fee or even for free.

Taxes - understand the tax liabilities and benefits in your state or province. Pay close attention to capital gains and tax deductions eligibility.

Payments - income and expenditure need to be clearly understood so you would know where you stand financially at any given point of time. Here are a few steps that would help you in that direction:

a. Calculate your break even point.

b. Set up a rate chart that covers your daily/ weekly/ monthly/ annual rates.

c. Work out a system whereby you would be able to understand your cash flow, expenses and net income.

d. Have a payment schedule worked out.

e. Have standard forms and letters ready for easy communication.

Maintenance - maintenance of your home is an important activity, which would require your close attention. Unless the house is well maintained and cared for, your guests would not be able to settle in comfortably in your home. Here are a few important points you should remember:

a. Provide clear instructions on garbage disposal.

b. Provide a phone number for emergency contacts.

c. Provide clear instructions with a chart if possible, on what maintenance you expect your tenants to do and what will be done by you. See Addendum to Lease Agreement - Policies for a sample repairs addendum on 'Property Management Forms and Letters' disk.

d. Ensure that all the repairs and renovations are completed before the guests arrive.

e. Arrange for a reliable cleaning service or housekeeper (in case of vacationers; for non-vacationer lease, cleaning would be the responsibility of the tenant)

General: This covers a few things that would facilitate a comfortable stay for your tenant:

a. Provide informative documentation about the attractions in the area.

b. Provide a list of your recommendations for dining out, shopping and entertainment. This would be exceptionally well received by your tenants.

c. Provide a tour map of the city, public transit map if you have one, and few taxi companies' numbers.

d. Provide an up-to-date yellow pages book.

Landlord - effective communication is very important both before and after finding the right tenant for your home. Here are some guiding points:

a. Take some time to prepare standard answers to the most common questions you will get.

b. Set up standard procedures, so both you and your tenant know how to proceed in certain situations as well as have same expectations. An example of such procedure would be a check-in and check-out procedure/policy.