The decision to rent out your home can be a smart one. You will generate an income stream and, depending on the markets, your rental income will be greater than your mortgage repayments. Your next big decision is whether to work with a real estate agent or lease out your home yourself. There are benefits and pitfalls to both choices. In this article, we’ll look at the pros and cons of each.
Find a tenant
If you already have somebody in mind as a tenant for your rental property, congratulate yourself on getting past the first step. Otherwise, you have a number of tasks before you can start to generate the stream of rental income:
- How much rent? As a private landlord, you can set whatever rent you desire. Your aim is to maximise your income. The risk is you will price your property out of the market. A real estate agent with local knowledge would know the market rates for your rental depending on location and the type of property.
- Advertising. A great starting point would be to ask friends and family if they know of anybody looking for a rental property. Facebook Marketplace often has posts with properties to rent. You may be able to place an advertisement in the small ads section of your local newspaper. A real estate agent would already have potential renters on their books or as regular visitors to the rental listings on their website.
- Screen the tenant. The real estate agent will ask for proof of income (payslips) and may check bank account statements to make sure your potential tenant earns enough to afford the rent. They may obtain personal references as a character check. You could do the same but, in practice, private landlords often trust their choice of tenant. This trust may turn out to be misplaced if the tenant doesn’t pay the rent promptly or doesn’t care for the property.
- Prepare the lease agreement. The lease agreement is the legal contract between you and your tenant. The lease will confirm how much the rent is and when it is due. It should clarify when rent reviews will happen and how they are conducted. You must state the term (duration) of the lease and what will happen if the tenant wants to leave before the end of the lease. If you are requesting a security bond, the lease agreement will confirm how much the bond is and where you will deposit the funds. It should call out the conditions under which you may refuse to return all, or part, of the bond. A real estate agent will have a standard template for a rental agreement which they tailor for each property and tenant.
The lease agreement has been signed and the tenant has moved into the property. Now you can sit back and watch the rent roll in, right? Wrong. Of course, you may have the perfect tenant and the perfect tenancy, in which case this will be a stress-free money-making venture. A professional real estate agent will have a property management team. They will be experienced and will know the risks that may occur and will have processes in place to handle them. Your property manager’s task list will include
- Rent collection. The tenant may not always pay the full rent as scheduled. Your real estate agent’s property manager will need to contact them, via telephone, in writing or in-person to make sure the rent is paid as soon as possible. If the situation is not resolved it may be necessary to evict the tenant.
- Maintenance and repairs. Your property manager will hire qualified tradesmen for regular maintenance on solar panels, washing machines, air conditioning systems to keep them in peak condition. They will be the first point of contact 24-hours a day for any emergencies. They will have a list of emergency contacts to make urgent repairs.
- Managing complaints. The tenant may raise issues regarding the state of the premises or the garden or any fittings or furniture provided. Other residents or neighbours may have complaints about your tenant. A property manager will know how to handle conflict and will have dealt with similar issues before.
- Regular inspections. At least once each quarter, a property manager will check in with the tenant. This gives them the chance to inspect the property. They will note any damage or excessive use to fittings or furniture and arrange any maintenance or repairs needed.
Conclusion – The MGM Martin difference
There’s no doubt you could lease out and manage your own property. You would have complete control over who lives there and would not have to pay commission to a real estate agent.
Of course, doing this is time-consuming and can be stressful. The reason landlords ask MGM Martin to handle the leasing and property management is for peace of mind. It takes time to advertise the property, identify the best tenant, draw up the lease. This is what MGM Martin do. We have years of experience in renting out properties. We have a stream of potential renters and we have drawn up countless lease agreements.
Our property management team are on-call all day every day to provide support for you and your tenant and to ensure urgent repairs take place as soon as possible.