Your definitive guide to renting out your property
California is home to a thriving rental market, making more and more homeowners consider renting out their property to earn more money. While the state’s robust rental market is certainly very encouraging, most people tend to overlook the many responsibilities attached to being a landlord.
Renting Out your Property
Putting your property up for rent is not as simple as looking for a tenant and making them sign a contract – it involves preparation, research, and knowledge of several California and federal laws.
Thinking about preparing your property for rent? Here’s a helpful guide:
Research on federal, state, and local laws
Before preparing to put your property up for rent, you want to find out first and foremost if it’s legal. Most cities, neighborhoods, and homeowners associations have a set of rules or by-laws governing rental properties.
Moreover, the state of California has several laws in place which cover the rental process as well as the screening for potential tenants. There are also laws requiring the disclosure of information to both applicants and tenants, and laws that place restrictions and limitations on fees and rent collected by landlords.
Landlords in California are also required to give tenants written information regarding Megan’s Law. There’s also a law requiring landlords to disclose whether the property uses lead-based paint.
Doing some research on these laws beforehand will ensure a smoother process.
Create a Limited Liability Corporation or LLC for your rental property
Having a rental property is similar to running a business, which means there’s also a possibility for encountering lawsuits. If your home is listed under your own name, facing a lawsuit will place you as the defendant, and losing any assets you own is very likely. Having an LLC for your rental property is an effective way to limit your personal liability to that property’s value.
For more information about creating an LLC, visit the California Secretary of State’s website.
Consider how much you’ll charge for rent
Knowing how much you’ll charge for rent is one of the key items to consider when creating a rental property. You can do some research online by taking a look at listings in your local area, and comparing your own property with those. If your property has unique features or special amenities, you can factor these in when determining a reasonable amount of rent from tenants.
Prepare a proper rental contract
Preparing a detailed rental contract is often considered a difficult and time-consuming process, as you’ll need to sift through many specific terms for your rental contract. Because California does not require a standard rental agreement, you’re free to decide on what terms appear on the contract.
One important thing to keep in mind is whether to offer a periodic rental agreement or a lease. A lease binds a tenant for a specific period of time, while a periodic rental agreement depends on the length of time covered by each rent payment.
You also have the option to go with a default rental contract, which is available online, at office supply establishments, or at a real estate office. You are free to customize these default contracts in order to suit your preferences.
Your rental contract is a very important document, as it establishes the terms between you and your tenant. It will also help you avoid any potential lawsuits.
Show your property to prospective tenants
After preparing your property for rent, the next step is to get prospective tenants to see it. Schedule an open house and place ads on your local paper, online, and outside your home. Make sure to put important details in your ad such as details about the property, monthly rent, and your contact details. Have a rental application ready for attendees of your open house and for anyone interested in renting the property.
For information about rental properties, visit this page.