Transforming your apartment for rental to willing individuals is a sure-shot way of ensuring continuous income. This residential property can be a recently purchased piece of real estate or an older property that became available once you upgraded to a bigger dwelling or moved to a smaller space.
Apart from the little money that goes into renovating the space you intend to give out on rent, you do not need any large capital investment. Having a methodical approach such as diligence in background checks of applicants, and a clever business sense to explore additional income opportunities, you as an owner, can easily generate a good source of income for yourself within little or no time.
Here are a few renting business basics that you need to be aware of before you start giving out your apartment for rent.
The shortage of capital should not be an obstacle to planning the apartment rental business. To start a rental business you must have land and the building from the ground up and for that, you must have capital. For gathering enough capital here are a few options you might want to look into:
- Loan from friends, relatives
- Your savings
- Loan from banks
There is however one drawback of bank-financed loans that they require documents that may need a long time to complete.
You must choose the land for rental wisely. While purchasing the land keep the following things in mind
- Try to buy one with adequate transport access.
- Choose one near schools, establishments, and points of interest
- Purchase land from a legitimate owner
- Make sure that the land is not on a major fault line
The amount of capital you are investing determines whether your renting space will be single-story or multi-story. Before purchasing the property, conduct an intelligent search to make sure that the property has a clean title.
Government License and Permits
Once you have the capital and the property make sure you have all the government clearances and permits form the respective government agencies. This will avoid any inconveniences in the future.
Once the house/building is constructed
- Register the business at the Department of Trade and Industry (DTI) if it is a sole proprietorship
- If you are planning to put up a corporation then register it at the Securities and Exchange Commission (SEC)
Get insurance for the property
It is always important to be prepared in case of any eventuality.
- You must get your property insured. It might be an added expense but that is compensated by the peace of mind you get knowing that your investment is secure
- Get insurance through an established insurer in the area with a solid track record.
Draw up a lease
Before you rent your property to the tenant
- Draw up a lease by putting everything in writing for the protection of both parties.
- Use the services of a good lawyer in drawing up the appropriate contract
Make sure you only choose the tenants who are capable of paying rent and present the least property damage.
Maintenance of Property
Giving your property on rent also requires you to maintain it regularly to ensure that it will last longer and give a higher return.
- Do a periodic checkup of the property
- Do not ignore the complaints of the tenants
- Get the repairs done as soon as possible