W and I have been thinking about getting into the rental market business. We want to diversify our investments further, and have been thinking that buying rental properties would be a great way to do this. Renting a home isn't always an easy job, but it can be considered passive income if you do it correctly.
However, we have heard of a lot of horror stories about people who have really bad tenants living in their rental homes. I know of so many people who in the offline world tell me these stories, and I have also seen homes trashed and almost destroyed in the inside of the homes because of what tenants have done. I have seen carpets absolutely destroyed, garages catch on fire, windows broken and so on.
Also, check with your country, state and local laws. In some places, it is really hard to kick a tenant out, because the law might be on the tenant's side. You may have to wait until 6 months of non-payment of their rent has happened until you can kick them out, and sometimes it might even be longer. Could you do with 6 months of you having to cover everything? There are companies out there who protect you against this, such as CIA Landlord Insurance.
Even though there are bad tenants out there, there are also many good ones who want to rent as well.
Check your potential tenants carefully. Most rental homes will have more than one person who is interested. Perform a background check. Check their references. Check their credit report. Check their employment history and make sure that they have reliable income.
Make sure that you have contracts to be signed. Scrutinize these contracts and find or create one (with a lawyer, if possible) that best fits your circumstances. Let it be known whether animals are allowed or not. Sometimes tenants will try to hide them, and you should let the consequences of this be known.
Lastly, before your tenant moves in, make sure to get deposits. A safe bet for you is to ask for the first two months rent before they move in. Or you can ask for the first month and last months rent.
Have you thought about getting into the rental market? Why or why not?
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