How’s the Rental Market?
This is a question I receive multiple times a week and my answer is: BOOMING! During the past several years, rentals have become a large factor in the real estate community due to short sales, foreclosures, Relocation, and potential buyers not qualifying or having the down payment for a mortgage. Landlords have reacted current market conditions by increasing monthly rents by 5 – 15% ($100.00—$300.00 per month).
If you are considering renting a home in the near future, I recommend working with a realtor. There are several websites advertising rental homes but not all are legitimate. I have had clients send money to what they thought was the owner/landlord, but it turned out to be a scam and they had no recourse to recoup their money. When renting a home, be prepared to complete the required paperwork: Lease Application, Credit Report, Employment Verification, and a background check (similar to applying for a job). In addition to the paperwork, the landlord may request additional financial verification, which can include two recent paystubs or a current bank statement. A typical rental will want first month’s rent and one month’s security deposit.
The lessee/tenant does not pay any fees to the realtor, rather it is the home owner/lessor that hires and pays the brokerage firm to market their property and find a qualified tenant. A lease is executed between the lessor and lessee, which is very specific about how the property is to be used and who takes care of the utilities, yard, snow removal, and repairs to the property.
Some rentals are pet friendly and will require an additional pet deposit. This amount is negotiated within the Rental Agreement and may or may not be refunded. Renter’s insurance may be required to cover the lessee’s personal belongings in case the home incurs damage. Rental insurance is minimal, usually less than $500 per year.
I recommend to my clients: treat the rental as if it were your own home and return the home to the lessor in the same condition you rented the home, except for normal wear and tear. The home owner/lessor will appreciate this and will be agreeable to returning your full security deposit. If there is damage, depending on the amount, the lessor will keep some or all of the security deposit to pay for repairs outside of minor day to day usage.
Are you interested in generating some extra income while building equity? Becoming a landlord may be the answer. For as little as $130,000, you can purchase a two bedroom condominium and generate monthly rents from $1,200 – $1,600.