Are you moving to another city and don’t want to sell your current home? Or maybe, was renting out your Joplin, Missouri home among your plans from the onset? Whatever the reason for renting out your home may be, being a landlord can be lucrative.
Basically, being a landlord can help you build long-term wealth, as well as earn passive rental income. There’s one caveat, though: you must do it right! Simply being a landlord isn’t a guarantee to quick riches.
In today’s article, the team at Pro X Property Management will take you through everything you need to know when it comes to renting out your Joplin home.
1. Understand the responsibilities that come with being a landlord.
Landlording is a demanding job. The job description entails a ton of responsibilities. The following are some of the common landlord responsibilities.
- Ensuring a home is rent-ready prior to renting it out.
- Marketing the property to prospective tenants.
- Screening tenants to avoid renting to potentially difficult ones.
- Drafting a legal lease document in line with the Missouri landlord-tenant laws.
- Responding to maintenance issues on time.
The list goes on and on…
If you have managed a property before, then self-management can be an option to consider. However, if you’re just starting out, then hiring an experienced property manager may be the best option for you.
2. Draft a good lease agreement.
A lease agreement is a legal document that outlines each party’s rights and responsibilities. Once signed, both the landlord and tenant must abide to its terms until it expires.
It also goes without saying that it’s legally binding, and either party may sue the other for failing to adhere to it.
When drafting a lease agreement, you want it to be as ironclad as possible. This will help easy to pursue difficult tenants for violating the terms of the lease agreement. You’ll also want to include important clauses, such as:
- Rent-related terms. For instance, how much it is, where and when it’s to be paid, and amount of grace period/late fees (if any).
- The amount of security deposit. Make sure to charge the right limit in accordance with state laws. Specifically, ensure you charge your tenant no more than 2X the rent amount. Also, avoid charging non-refundable deposits as they are illegal in Missouri.
- Utilities. State who is responsible about what utilities.
- Subletting. Will you allow tenants to sublet their rented unit? If so, then make sure to have a policy to protect your interests. For example, require that the tenant seek your permission prior to subletting.
- Pets. Will you allow tenants to keep pets in their rented premises? If you don’t, then let the tenant know prior to them signing the lease. But if you do, then make sure to have a pet policy in place. In the policy, you may define important things, such as number, size and type of pets allowed.
Once you have drafted the lease, you may also want to have a professional examine it to ensure its law abiding.
3. Price your Joplin rental property properly.
How you price your rental home can make all the difference. It can make the difference between a property is rented within a reasonable time and one that takes ages to rent out.
Charging tenants, the right rent will ensure you maximize your income all while ensuring your property remains competitive in the local rental market.
When trying to determine how much rent to charge, there are a few things that you’ll need to consider. The first thing you’ll want to know is the value of your home. Websites like Zillow could come handy in this case. Alternatively, hire an appraiser for a more accurate assessment.
Your Joplin home’s market value is directly proportional to the amount of rent it should rent for. In typical situations, landlords usually charge anywhere between 0.8- and1.1% of the home’s value as rent.
So, supposing your home is valued at $250,000, then the rent to charge should fall anywhere between $2,000 and $2,750.
Once you have a figure to work with, do some research of the neighborhood. The goal of the research should be to know how much rent similar units are going for. Of course, the last thing you want is to underprice or overcharge your tenants.
4. Take the proper insurance cover.
Once you rent out your Joplin home, a homeowner’s insurance policy will be rendered null and void. That’s because renting out a home comes with unique challenges that a homeowner’s insurance policy may not cover.
A landlord’s insurance cover is designed to protect your investment property and your rental income. It doesn’t cover your tenant, though. Basic insurance helps cover the building for structural damage, as well as any minor injuries that may happen at the rental premises.
5. Require renters to take an insurance cover.
As already mentioned, a landlord’s insurance policy doesn’t cover tenants. It only offers protection to your investment property and rental income. As such, requiring tenants to take up an insurance cover can be a great idea.
A renter’s insurance covers for things like water backup damage, theft, certain natural disasters, and bodily injuries. Also, as a landlord, it helps cover any damages caused by a tenant or their guests.
6. Familiarize yourself with Missouri landlord-tenant laws.
This one goes without saying. Once you become a landlord in Missouri, there are certain laws you must abide by in order to avoid potential legal conflicts with your tenants.
A good example of Missouri landlord-tenant laws is the Fair Housing Laws. It stipulates that landlords must treat all their tenants equally and fairly regardless of their protected characteristics.
Examples of protected characteristics include race, color, disability, familial status and national origin.
7. Hire a property management company.
Have you ever managed a rental property before? Will you have the time to adequately tend to your Joplin tenants’ needs? If you answered “no” to both questions, then hiring a professional can be the best option.
A comprehensive property management company will help you in all aspects of property management, from marketing your property to screening tenants to collecting rent and everything in between.
The Bottom Line
Renting out your house in Joplin can be the best decision ever if you know what you’re doing. But if you doubt your landlording abilities, Pro X Property Management can help. Get in touch to learn more!