Suppose you have a house in which no one lives, and you pay utility bills regularly. And this additional expense item is not at all happy. Or you want to buy a house on a mortgage, but it is not clear how to pay for it.
The way out is to rent a house for a long time or even more profitable daily rent. Let’s take a closer look at the home rental business and find out how attractive this area is.
Analysis of demand in the real estate rental market
In 2019, rising property prices forced many people to rent a home as buying their own became unaffordable. This business has become popular again and, as statistics for 2020 show, rental prices in megacities have increased by 5-7% . Websites on the Internet are clogged with “Rent/Rent” ads, public transport stops are pasted over with offers for renting housing for a day or a long time, while the advantages of the area in which the rental housing is located are described in colors.
There are also plenty of people who want to rent housing – these are students, visiting citizens, youth companies, young families, business travelers. The terms are also different, some for two or three days, and some for a year. Demand gives rise to new areas of business, often quite profitable.
But, like any other business, it has its own nuances and subtleties, so let’s get acquainted with them.
Rental of property
What is a lease? A lease is a form of contract in which the owner leases a property for temporary use for a specified fee. There are three types of lease:
Daily rent is the rental of real estate for a period from 1 day to a month. This type of lease is the most profitable, as it allows you to earn income 3 times more than renting the same house for a long time and it does not take much time during registration. It does not require state registration and does not need to be notarized. But there is a significant drawback – the constant active search for customers and the preparation of the premises between settlements.
Applicants rent housing for a day or 2-3 days is enough. Basically, these are visitors who are not willing to stay in hotels, young families or youth companies who decide to organize a weekend trip with barbecue in nature. Having rented a house for a day, be mentally prepared for minor troubles in the form of broken furniture, damaged lawns, noisy parties and neighbors’ dissatisfaction about this.
Sometimes a daily rent is issued without filling out documents, but on an oral agreement, which also does not carry a guarantee of compensation for the damage caused.
Long term rental
Long – term lease involves an agreement to transfer the use of real estate for a period of 12 months to 5 years . A significant difference: when renting for 12 months or more, the contract must be registered with Rosreestr, because of this, the contract is often concluded for 11 months and then extended.
The profit from a long-term lease will be less than the profit from a short-term one, but at the same time there are advantages: less depreciation of the property, no need to constantly look for clients to rent housing, and there is no need to prepare and clean the house for the entry of tenants . Another important plus is reliability, stability and much less risks. Just sign a contract and get income for a long time.
At the same time, it will not be so easy on your part to make any changes to the long-term lease agreement, each additional agreement will have to be registered with Rosreestr.
Three months before the end of the rental period, it is necessary to agree on an extension of the contract, otherwise it will be extended automatically. You have no right to terminate the contract with the tenants , but on the part of the tenant of your housing, everything is much simpler, it is enough just to warn you three months before the termination of the transaction.
How to rent a house
Before starting a home rental business, we recommend that you take out property insurance . You can add a civil liability clause to the insurance policy and in the event of, for example, a fire due to the fault of the tenant, the insurance company will compensate for the loss.
Then pay attention to the appearance of the premises, if you decide to make a facelift, it is better to choose calm, muted tones. At the same time, pay special attention to filling the house, since the lack of furniture can delay the process of renting out the house, but it is not necessary to spend large sums on the purchase of new and expensive equipment, but it is better to replace an obsolete TV or buffet with a more modern one.
Minimum list of necessary things:
- household appliances: gas stove, refrigerator, washing machine, TV, iron;
- furniture: kitchen set, sofa, mirror, bed, wardrobe.
- utensils, the most necessary;
- other items: 2-3 sets of bed linen, towels, curtains
Do not clutter up the house with furniture and various interior items, the client will still not appreciate your efforts. It is better to give the tenant the opportunity to equip his life on his own, if you want to buy another chandelier or rearrange the furniture, please let him do it, the main thing is that all the alterations are agreed with you. Create the illusion of his ownership, perhaps this will affect the extension of your relationship as a tenant and landlord.
We recommend checking and repairing gas equipment , plumbing and electrics. Firstly, it is a guarantee to preserve the property, and secondly, it will save you from unnecessary proceedings with the tenant.
How to find tenants
Now you can safely start looking for a tenant. Choose the most attractive and convenient way for you to solve this problem. The first option is to search on your own, the second is to entrust the selection of clients to professionals.
Those who have been working in the real estate market for more than a year prefer agencies . They will help both in finding a client and in concluding a lease agreement. There is a minus: you will have to pay for the services of the agency, and this amount may not be small.
If you are looking for clients yourself, then carefully consider the text of the ad, do not embellish your house, but be sure to indicate the existing advantages. At the same time, indicate for how long you plan to rent out your property. It is not necessary to describe all the details and nuances of housing, it is enough to attach a photo, and the client will see everything for himself.
Negotiation of lease terms
To determine the price at which you plan to rent a house, you first need to monitor prices for similar properties, and then take into account the following factors:
- the territorial location of the object to be handed over (how far it is from the city);
- bus timetable, availability of taxis, minibuses;
- technical condition of roads;
- availability of communications;
- the presence of neighbors;
- placing nearby a kindergarten, a shop, a hospital and other infrastructure facilities;
- the appearance of the site and the presence of household outbuildings.
Be sure to discuss additional conditions, for example, how often you will come to check, the terms for paying rent, the conditions for keeping pets, how to behave with neighbors, who will be doing minor repairs, etc.
Conclusion of a contract of employment
To sign a lease agreement, the following documents are required:
- the passport;
- a document confirming the ownership of housing;
- certificate that there is no debt on utility payments;
- cadastral passport of the object;
- lease contract.
Remember: the contract comes into force from the moment of its signing!
You can make an inventory of the property that is rented along with the house, but you should not describe everything to the flesh, usually only expensive property is included in such a list.
Be sure to draw up an act of acceptance of the transfer of property, where you indicate the condition of household appliances and furniture, attach photographs of the premises and property, note the readings of all counters.
The following clauses must be included in a standard contract:
- lease term;
- a detailed description of the property, an extract is made from the cadastral passport;
- the right to own the object (extract from the USRR);
- number of registered residents;
- information about the person who will reside;
- conditions, termination of the contract;
- verbal agreements that were described above, etc.
Make sure that the tenant’s documents are in order and only then sign the contract. When renting a house, the land on which the house is located is also rented.It is important
Remember: you can change the terms of the contract only with the consent of the tenant, and you can revise the amount of the lease payment only once a year. Then you need to go through state registration and certify the document with a notary.
Apartment building format
The name “Profitable House” speaks for itself. These houses were built for income generation and were an apartment building intended for renting out apartments. Such houses have appeared since 1785 and enjoyed great success. The idea of the project was that the owner of such a house rented apartments available for the middle class for long-term rent.