How can I safely rent out my house long-term?

November 2, 2013 7:47 AM

I have a house I don't use and want to rent it out to an eager family but am a complete novice. What's a good resource for ready-made contract agreements for this? Or should I go to a lawyer and get something drafted up?

It's a simple situation. I have a house that someone gave me (ok, not completely true but close enough). I don't live there. I don't intend to live there. I listed it for ha-has on a website ("Sabbatical Homes") because it's in a university city. I received a response from someone who contacted me outside the website (to avoid paying the fees associated with leaving messages, etc.) They want to take a look at it and, if they like it, sign a contract, make a deposit, and rent it out.

They are a friendly couple with a baby.

The idea is simple: They pay $X/mo for a six month lease with option of renewal. They also make a deposit.

How can I protect myself from being sued or from somehow screwing this up? I'm a total novice here. Also: I live in another country from my house (which is in the US). But my brother will help take care of the day-to-day.

posted by mateuslee to Law & Government (12 answers total)

Best answer: Most states in the US have a generic lease form that syncs up with landlord/tenant laws in that state. You can make changes (if necessary, with a pen and initial the changes, or write up an addendum), but they're pretty much meant to protect each party to a reasonable degree. You should be able to google "STATE lease agreement" or send your brother to the nearest office supply store.

As a former landlord who has suffered crushing financial problems as a result of shitty tenants, have your brother pick a background/credit check service and USE IT. Because once you let people into your house, getting them out is extremely difficult, so at least find out up front if they are already known to be horrible human beings. Maybe they're still horrible but there's no record, there's nothing you can do about that, but at least check first.
posted by Lyn Never at 7:54 AM on November 2, 2013 [3 favorites]

Best answer: You should hire a property manager to handle everything. And you should be able to purchase a standard lease for less than $20 that is compliant with the rental laws in the state where the house is.

In New York or New Jersey you can purchase leases from blumberg law service. I use them for an apartment that I sublet out.
posted by brookeb at 7:55 AM on November 2, 2013 [1 favorite]

seconding brookeb's property manager. it'll cost you 10-15 percent of the rent, but they handle everything from initial screenings to evictions, they have experience and know what to look for, and they insulate you from those midnight calls about the toilet being clogged.

you have no idea how much one bad tenant can cost. because i do, i would never be a residential landlord, and i have told people to buy REIT shares if they want to invest in real estate.
posted by bruce at 8:02 AM on November 2, 2013

Response by poster: I'm fine with losing 10% of the rent in return for no headache. I will look for a property manager. I guess they will take care of everything from there.
posted by mateuslee at 8:04 AM on November 2, 2013

if they like it, sign a contract, make a deposit, and rent it out.

I'm a little confused by this. Are you proposing to rent the property to someone who would pay you, and then that person would rent the property out to other people? Because if so, you'd potentially be on the hook for the insurance and licensing requirements of your city for short-term rentals, so you want to make sure you understand what those are and are prepared to comply with them.
posted by decathecting at 8:34 AM on November 2, 2013

Response by poster: ... no no, this person himself would rent it from me directly w/o middleman.
posted by mateuslee at 8:44 AM on November 2, 2013

First time landlord in a different country with a family member with no experience willing to help you out? Hire the property manager. Not just will that solve your headache issue, but it's almost certain to be cheaper in the short to medium term.
posted by jeather at 8:50 AM on November 2, 2013

This is only a mild caution, but while these people seem nice, I feel like the going off-books thing is a bit of a red-flag. Sort of a slightly pinkish flag, maybe.

Do you want to deal with people who are willing to go off the books and cut out someone else's revenue stream in order to save themselves a few dollars? Are those people going to necessarily take good care of your place and be reasonable tenants or are they going to constantly be chiseling you for every possible dime?
posted by jacquilynne at 9:53 AM on November 2, 2013

Best answer: Get a management company. Being a landlord isn't a hobby, it's a job. And you don't even want to know how many ways this could go south.
posted by valkyryn at 11:01 AM on November 2, 2013 [1 favorite]

...I received a response from someone who contacted me outside the website (to avoid paying the fees associated with leaving messages, etc.)

That's kind of a red flag.
posted by 517 at 4:52 PM on November 2, 2013 [1 favorite]

I used to be a small-time landlord. Make sure your homeowner's insurer knows you are renting the property out, and that you have reasonable coverage. Does the town have any regulations about rentals? Call City Hall and check. Get references, check them. The property manager should be bonded, meaning they are insured to handle your money and not run off with it. Who will mow the lawn, shovel snow, sand and salt ice, etc.? The one thing I was adamant about with tenants was - the rent is due on the 1st, no excuses. Late fee if it's not received promptly. It's really easy to be a bit late one month, then later the next month, and then nobody ever catches up. Take pre-move-in pictures to document the move-in condition.

Put most of the effort into finding good tenants. The rest follows from that.
posted by theora55 at 5:55 PM on November 2, 2013

Best answer: I think it's worth a serious consultation with a local landlord tenant lawyer. The goal is for you to have a reasonable layperson's understanding of the laws that will affect you, your property, your tenants, your taxes, etc. then s/he can be on retainer if you need them. An ounce of protection, etc etc.
posted by Salamandrous at 6:00 PM on November 2, 2013