Real estate is a great investment option with lower market risk and broader scope for diversification. As a fixed tangible asset it carries the prospect of reliability and higher long-term investment return. With a flourishing trend of rented living in urban areas, renting property is a great way of passive income. It provides a steady flow of income every month. But renting a property is not a cakewalk. The continuous flow of income comes with its own set of problems. The whimper of tenants and ongoing list of property maintenance, sometimes become too much to handle.
To avoid such tenant hassles later, follow this checklist before renting out your property:
When you have found your tenant, it is legally advisable to prepare a rent agreement before anything else. The agreement needs to be duly signed by both the parties and all the clause and conditions including the exact rent amount needs to be properly laid out. But the question is whether to forge a Lease or a License. When signing a Lease, the landlord transfers the rights to a property to the tenant for a particular tenure. But while signing a License, the landlord grants permission to his tenant to stay in his property without transferring the rights of the property. In case of any unfair claims by the tenant, a license agreement will yield interest in favour of the landlord.
If the rental tenure is more than 12 months, it is paramount to register the rent agreement instantly. Only a registered agreement is considered a shred of viable evidence in case of any litigation. If the tenure is under a year, no registration is mandatory but only the stamp duty charge is applicable.
Checking the background of your future tenant is of utmost importance. We cannot stress enough on this point. Many a time the landlord and mainly the property gets tired up into legal processing due to the tenant's behaviour. This step lowers the risk of giving rent to a person with a criminal record. You have to download the verification form from the state police website. Submit it along with the identification proof of the tenant to your locality’s police station. This simple step can make your life a lot easier and stress-free as a landlord.
It is important to set some ground rules from the beginning. Late night parties, allowing pets, loud noise, what the tenant is allowed to do and not allowed to do, everything needs to be openly discussed beforehand and included in the rent agreement to avoid conflict.
Security deposit is not just money; it is a protection cover against any damage caused to your property. It is necessary to take a certain amount to ensure that when the tenants leave, your house is left in a good condition without any damage caused.
These precautions will help in assuring that your property stays in proper condition and your experience as a landlord in pleasant.