Don’t make these 5 mistakes when renting your home
1. Screening your tenants improperly: This, by far, is the biggest mistake you can make when renting your home out. We recommend a criminal and credit history check, previous eviction search, checking previous rental references, and verification of adequate income for the rental amount (at least 2.5-3 times the rental amount depending on other debt shown on the credit report) on all occupants over the age of 18. When looking at credit reports always pay attention to any collections from property management companies, utility companies, and cash advance companies as this is a sure indication of the way they have handled properties in the past and their ability to budget their money.
2. Getting too familiar with your tenants: Have you ever heard the saying “give an inch take a mile”? This is extremely true with your tenants. It is important that you set boundaries from day one. It is very common for tenants to try and take advantage of a generous spirit.
3. Using a low-quality lease: Some leases that can be purchased online don’t cover all of the bases. It is wise to purchase a thorough lease from a reputable attorney that cover late fees, security deposits, maintenance requirements from the tenant, a detailed inventory of the property, and importantly, in Colorado, restrictions of marijuana grow houses and use. A lease is the blueprint for your interactions between you and your tenant and can protect you in a litigious situation.
4. Not collecting an adequate security deposit or failure to collect all funds upfront: We recommend a security deposit that at least matches the first month’s rent in addition to a per pet deposit. Never allow a tenant to move in without all move-in funds being paid and we always require certified funds at move-in. If you have a check bounce after the tenant moves in you would be required to go through a potentially costly eviction process if the tenants do not rectify the situation.
5. Failing to maintain your property: Your rental home is your investment and should be maintained for a multitude of reasons. If you maintain your home properly it will help preserve the value of your home, prevent even more costly repairs in the future, and keep quality tenants happy and lower your vacancy rate. If you take pride in your home you are more likely to find a tenant that will too.
Owning an investment home can be a rewarding experience if handled properly. It is a great way to have someone else generate equity for you. Secretary of Estates takes your investment seriously, and with more than 20 years of experience, we have the skills and knowledge to make your foray into the rental market as seamless as possible. Give us a call today for a free market analysis at 303-660-8888 or email us at kate@secretaryofestates.com.