
Renting out your property can be a great way to generate passive income but there are a lot of considerations that go along with it. Obviously, you need to take care of your property, as well as the people that shack up in it. Here are a few vital details that you need to understand before renting out your place.
Differences Between A Guest And A Tenant
Believe it or not, there are key differences between a guest and a tenant if we are going by textbook definition. Most people don’t know how to know a guest vs. tenant but it’s important that you do as a property owner. Luckily, the differences are pretty easy to sort out.
To put it simply, a tenant is a person or a group of people that use your property, in exchange of monetary compensation to be paid by them. On the other hand, a guest is a person that stays in your property, free of charge.
You need to draw the line when a guest becomes a tenant or when a tenant becomes a guest. Usually, friends or relatives that you let stay over are considered as guests. However, if you charge them for rent, they’ll be counted as a tenant already.
It’s A Must To Know Your Tenants
This should be a given by now but you need to take your time when choosing your tenants. It’s not just the safety of your property that you should be worried about, it’s also the safety of those who live nearby.
Before approving a tenant, make sure to do a thorough background check on them first. After that, conduct an interview so that you get to know the person better. It pays to be a good judge of character for scenarios like this.
If you can, try to prioritize tenants who are people you can trust. This can be relatives or friends – or people that they refer to you. This protects your property from otherwise troublesome tenants that can cause serious damage as well.
Insurance Protects Your Property
The insurance package that fits for rental properties is home insurance. Although it’s a rental property, it can still be considered as a viable asset that can be protected via home insurance. It’s important that your home is ensured before you begin renting it out.
In any case your tenants destroy something in the property, they won’t be tasked with handling the insurance for you. However, if you have home insurance ready at bay, you can get compensated for damages or lost property as well. It’s a good investment to make for any property owner.
One of the benefits of home insurance is that it protects both your home and the items you have inside that you own.
These are just some of the vital details that’s important to know when you’re renting your place. Always consider these things before you accept a tenant. Remember, this isn’t just a means to generate passive income. It’s also an investment plan that you need to care for as well.