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Want to Rent Out Your Home? Take Some Advice

Gary Malin — 2012-09-24T15:00:00 00:00

Gary Malin (pictured at left) is the president of Citi Habitats, one of New York City's largest and most successful residential real estate brokerages. He is also a licensed attorney and a member of the Real Estate Board of New York.

Renting out your home for extra income can be a wise decision in today's housing market. In most major cities, there is currently great demand for rental housing. And if you must move in this current weak sales market because of a job transfer, an expanding family or any other reason, renting out your property -- rather than selling it -- is a great way to generate steady income while biding time for a real estate market recovery. If you have chosen to take the leap and become a landlord, here are a few ways to ensure that the experience is a rewarding one.

Everything in Its Place

The first challenge for would-be landlords is getting the home ready aesthetically to rent. The appearance and overall cleanliness of the home is essential in attracting qualified tenants, and the home needs to be pristine prior to showings. Key areas need special attention. As the foyer is the first part of the home that visitors will encounter, it needs to be especially clean, clutter-free and fresh-smelling.

It is often said that "kitchens and bathrooms sell homes." Well, they also rent them. Make sure these rooms are spotless. Kitchen counters and cabinets need to be clear of clutter, and appliances need to be wiped down with a mild detergent inside and out. In addition, bathroom tile grout needs to be mold and mildew-free. Use bleach and a toothbrush if needed, as nothing turns off a potential tenant more than a moldy tub/shower.

Most tenants expect their new homes to be freshly painted, so put a neutral paint color on all the walls. Remember to put your personal tastes aside. The goal in painting is to appeal to the greatest number of people possible, so it's not the time to take risks or explore your creative side.

Make It Feel Like a Home

Now that everything is neat, clean and fresh, it's important to make prospective tenants feel "at home" in the space. Staged or furnished apartments usually show better than unfurnished ones -- if a few rules are followed. Allow the furniture to define what a space is. People are notoriously bad at envisioning uses for undefined spaces. For example, stage an alcove off the main living space as a dining area or office space rather than leave it open to interpretation.

While basic staging is a huge help in moving a rental property, allowing your personality to be reflected in the home is never a good idea. Be sure to remove family photos, religious artifacts and anything that reveals facets of your personal life.

Insurance and Legalities

Insurance requirements for rental property vary by locality, so make sure you have the appropriate insurance for your area. In any situation where you have people residing in your home, you take on some degree of responsibility for their well-being and safety. Often known as "landlord insurance," these policies can protect you against damage from tenants, as well as from fire and other catastrophes. In addition, most policies will reimburse you for rental income that you lost while repairs were being made in the event of a claim.

In addition, a rental property needs to have proper permits. Unfortunately, there have been many tragic cases where homes have been illegally rented that were full of health and safety hazards, and people have been injured -- or worse -- as a result. While no one likes dealing with the bureaucracy, it's important to have all proper permits in place prior to offering the home for rent.

Establish Policies and Procedures

Who does the tenant contact if a pipe bursts under the sink at 3 a.m.? How is the rent collected? What is the policy in terms of keeping pets? What about roommate shares? All these policies need to be established prior to showing the apartment. In some cases (for example, if you will be living in a city other than the rental home) it may make sense to hire a representative or management company to take care of the property on your behalf and be your "eyes and ears" on the ground. Typically these property management firms charge approximately 10 percent of the monthly rent for their services. It may be well worth the expense.

Figuring out what to charge monthly for rent involves taking a few factors into consideration. The first is, what expenses do you need to recover on the home (property tax, mortgage payments, etc.), and, in turn, how much profit do you wish to make from the rental? Another important factor to consider is how much similar properties are renting for in the area. It would be wise to spend an afternoon playing "prospective renter" and taking a look first-hand at the competition and what those properties are asking for in terms of rent.

Finding a Qualified Tenant

There are a variety of websites devoted to connecting renters and rental properties, but don't forget the value of "word of mouth." Before advertising, be sure to research fair housing laws to ensure that you stay within their guidelines in terms of providing equal opportunity housing. It's important to check applicants' credit to get a sense of their payment history, and all leases should clearly define a specified term of occupancy and should be in writing. Never do business on a handshake, and be sure to collect a security deposit equivalent to at least one month's rent to hedge against potential damage to the property that's inflicted by the tenant. When drafting leases, it may be wise to consult an attorney to make sure you are well-protected.

Is Being a Landlord Right for Me?

While being a landlord has its challenges, for a person with an entrepreneurial spirit and a desire for extra income -- despite the inevitable headaches -- renting out your home can be the solution. It's important to keep a positive attitude and expect the unexpected. Despite the hazards, becoming a landlord has proven to be a positive experience for a number of people. Best of luck on your decision.

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See also:
Best Cities to Buy Rental Properties
Pam, Leo, Pierce: A Summer of Celebrity Rentals
College Town Real Estate Investments Score High Marks

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Gary Malin: How to Make Living With a Roommate a Successful Experience

Gary Malin — 2012-08-14T12:00:00 00:00

Filed under: Advice,Renting

Editor's Note: Gary Malin (pictured at left) is the president of Citi Habitats, one of New York City's largest and most successful residential real estate brokerages. He is also a licensed attorney and a member of the Real Estate Board of New York.

Sharing an apartment is a necessity for many people, especially those who are just entering the housing market for the first time on an "entry-level" salary. In these tough economic times, sharing costs with a roommate is a great way to help cut expenses. And living with someone can be a lot of fun and a great bonding experience: Many roommates remain lifelong friends well after their living arrangement is over.

But the success of a roommate relationship is dependent upon two factors -- factors that I cannot stress enough -- namely, compromise and communication.

1. Do you really want a roommate?

First and foremost, if you are considering a roommate purely for financial reasons, you may be able to afford an apartment on your own -- if you are willing to make the required tradeoffs. For example, if you are willing to move farther from the city center -- and live in a walk-up building instead of a luxury doorman tower -- there is a much better chance that you will be able to find a rental property that fits your budget. It all comes down to your priorities. What is more important to you: privacy, space and independence, or living in a prime neighborhood in a more luxurious building (along with the potential camaraderie of having a roommate)? The decision is yours.

2. Keep it equal.

If you choose to enter a roommate situation, there are a few things you can do to increase the chances of the experience being positive. While it's not always possible, it helps to start the apartment search on "equal footing," meaning that both parties are moving into the apartment at the same time. This scenario helps avoid the feeling that the apartment belongs "more" to the first person who got there, which can cause instant tension.

While it may seem cold, it also helps for both roommates to be in similar financial situations. It can cause problems if one party feels they cannot "keep up" with the other or if one roommate feels the other is "pulling them down" (by being late with bills, rent, etc.). What happens if one roommate wants to hire a cleaning service or spring for the premium cable package, and the other can't afford it? In roommate situations, a similar financial status equals a better chance of success.

It's also always a good idea for both roommates to sign the apartment lease. This way, both parties have equal rights (and financial responsibility) for the space. In many cases, apartments with two bedrooms will have a larger "master bedroom" (which may include an en-suite bath and/or larger closet space) and a smaller second bedroom. The equitable solution is that the person who sleeps in the larger room pays a larger portion of the rent. Exactly what percentage more should be discussed prior to signing the lease.

3. Communication is key.

Outline your expectations for the new living situation as soon as possible. Be clear as to your expectations up front and don't hold back -- it's better to discuss these issues prior to the move-in date rather than six months into a lease. What are your thoughts on visitors, the division of chores and sharing personal items or food? Everyone has a different idea of what an ideal roommate should be. Do you want a joined-at-the-hip best friend with whom you share everything, or a nearly invisible roommate who works an opposite schedule and locks the cabinet where their food is stored?

Also keep in mind that there is no better way to kill a friendship than by living together. The reason? People who are friends often take liberties with each other that they wouldn't dream of taking with strangers or acquaintances. As the saying goes, "You only hurt the ones you love." It's often best to live with someone whom you are not emotionally invested in.

4. Don't go to bed angry.

We've all heard this gem of advice when talking about tips for a happy marriage, but it applies to roommates, too. Do not let little annoyances build up. If something bothers you about the other person's behavior, my best advice is to address it immediately.

It also helps to use a little basic psychology. The "I message" is a powerful and proven tool to help diffuse tense situations. For example, saying "I was disappointed when I came home and saw all the dishes still in the sink" makes the other party react much less defensively than "you never washed all the dishes from last night -- it's still a mess!" Using "I" implies you are responsible for how you feel instead of placing blame on the other person by using the subject "you."

5. Don't sweat the small stuff.

As I stated earlier, compromise is a main component of successful roommate relationships. Will your roommate drive you crazy sometimes? I can almost guarantee it. When things are not going so smoothly (and this will happen) remember to put the situation in perspective. In some circumstances, it's simply not worth the stress. While I 100 percent advocate expressing any issues with your roommate quickly and directly, remember to pick your battles.

With proper planning and a focus on open communication, living with a roommate can be a rewarding experience. It will help you learn valuable skills in dealing with people that transfer to all aspects of life. In fact, I still look back fondly at many experiences I shared with roommates over the years, and I sincerely hope my advice helps you achieve the same result.

Click on the images below to see listings from Citi Habitats.

See also:
6 Steps to Finding the Right Apartment Rental
War Vet Accuses Pacifist Landlady of Discrimination
U.K.'s Speed Roommating Finds a Place in New York

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Gary Malin: Moving Day Doesn't Have to Be Stressful If You're Prepared for It

Gary Malin — 2012-07-25T10:00:00 00:00

Editor's Note: Gary Malin (pictured at left) is the president of Citi Habitats, one of New York City's largest and most successful residential real estate brokerages. He is also a licensed attorney and a member of the Real Estate Board of New York.

While the purchase of a new home is a dream come true for many, the actual process of finding and then moving into a new residence can be a time-consuming and aggravating process. Such a big life change is inherently stressful, but there are several strategies you can use to ease the pain throughout every stage of the process. The key is to think ahead. Proper planning is your blood pressure's best friend when it comes time for moving day.

1. Do your homework.

The first -- and, perhaps, the most important -- step you can take to ensure a stress-free move is also the simplest one: be prepared. When it comes to the process of searching for a new home, whether it's across town or across the world, you need to do your due diligence and become educated on the local market. Every market operates differently.

I work in New York City, and I cannot tell you how many times clients arrive here woefully unprepared for the realities of this marketplace. Our market is much more competitive (and expensive) than many other places in the country. I think people realize that on the most basic level, but the extent of the differences may surprise many.

For example, the average one-bedroom Manhattan apartment rents for $2,816 per month, while the average price of a one-bedroom condominium is $834,000. That's vastly higher than the nationwide average. In addition, in the city's rental market, apartments can be taken in a matter of hours. It's important to face the brutal facts. The truth is, if you are moving to Manhattan, you need to have a relatively robust budget -- or be willing to compromise. You also need to be willing and able to act fast.

Other local markets have their own quirks. In southwestern cities like Phoenix and Las Vegas, the housing market was greatly impacted by the recession, resulting in an abundance of foreclosures and short sales. While at first glance, this may seem like an "easy" place to buy a home, the reality is that many of these properties are being snatched up by investors who pay all cash for the properties. This influx of "fast cash" has made the market surprisingly competitive for the average buyer, who is dependent on bank financing.

2. Know your neighborhoods.

It is always a smart decision to do some research on particular neighborhoods in your area of interest. Often, the most reliable information can come from a friend (or a friend-of-a-friend) who lives in that particular community, but if that is not possible, there is a wealth of information online. If you are relocating to a new city and know where you will be working, use mapping websites to investigate locations that are convenient to your workplace via highway or mass transit. These sites are great because they capture a true-to-life picture of reality, warts and all.

Ask yourself, what can I afford and what are my "need to haves" versus my "want to haves." Remember: No matter where you move, real estate is a game of trade-offs, and what you get for your money can vary tremendously over the space of a few miles. Are you will willing to bear a longer commute for a larger home? How important is the local school district or access to shops and amenities?

3. It's all in the execution.

Now, we're on to the move itself. The first step is to take inventory of your possessions. Move only what you use regularly or love dearly. Now is the perfect time to say goodbye to items that you have outgrown, that have gone out of style or that you just don't use anymore. Evaluate what furniture will be a fit for your new place and what you can sell or donate. Cutting back on hauling unnecessary items goes a very long way in de-stressing a move. There is simply less to worry about -- literally.

The next step is to make a timeline or checklist of all the tasks that need to occur before moving day. Boxes need to be packed and unused items discarded. In addition, the postal service has to be contacted, appointments need to be made to install cable and Internet service, and utility companies need to be notified of your move.

Overwhelmed? A professional moving company can take a lot of the work out of a move -- especially one that is complex. I am a big proponent of the value of "word-of-mouth" referrals. My advice for using movers is to get a recommendation from a friend. If that is not possible, call or log on to your local Better Business Bureau and get estimates from three highly rated companies on the list. Moving is a daunting task by any measure, and sometimes its best to leave the "heavy lifting" to the professionals. Some companies will even pack and unpack your belongings for you -- but remember that such pampering comes at a price.

Although proper preparation can minimize the stress of a move, just take it all in stride. This too shall pass, and in the meantime, expect the unexpected. Remember, this is an exciting and memorable time in your life. Just because there will always be some bumps along the road doesn't mean you can't enjoy the ride.

Click on the images below to see listings from Citi Habitats.

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find homes for rent in your area.

Follow us on Twitter at @AOLRealEstate or connect with AOL Real Estate on Facebook.

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