Earn extra by becoming a landlord

One way of earning an extra monthly income is to become a landlord, at basically little expense to you. Investing in property is one of the best investments you can make, by simply applying for a home loan if you are thinking about renting out your house. Renting out your property to someone is a business and financial transaction.

The agreement

Before you hand over the lease to be signed to your tenant; discuss your expectations and responsibilities. Talk over how long the arrangement is to last and make it clear that there will be a legal agreement for the tenancy. Getting this out in the open early helps prevent misunderstandings should problems arise. Rather ensure that your tenant understands where you stand before signing any papers.

Charge a fair market rate

You will have to charge a fair amount of rent payment if you intend to deduct expenses from your rental income when you file taxes. The South African Revenue Service allows the deduction of certain expenses -- such as insurance, maintenance, real estate taxes and mortgage interest - from your reported rental income. The deductions reduce the amount of your rental income and lower the amount of taxes you owe.

Property that is not your house and that you rent out to make a profit from, can yield deductible expenses that exceed your gross rental income. If you charge your tenants less than the fair market value for comparable housing in your area, you risk having your property classified as a second home. Which means you will not qualify for the deductions. First find out what the fair market value rent amount in your area is.

Sign a lease

Signing a lease will protect both you and your tenant if a problem should arise. Without a lease, you have no leverage to enforce any agreement you might have with your tenant. The tenant lease should provide the terms of your agreement, including rent amount, rules about smoking and pets, when rent is due, who is allowed to live in the property and when the lease ends. Signing a lease helps frame your landlord-tenant relationship as a business transaction.

As the landlord you are there to provide a basic service. It’s your duty to ensure your tenant is happy and secure. If a dispute should occur, rather resolve the issue instead of letting your tenant go. Word about bad landlord service spreads quick and can quickly turn you into the sour landlord no one will like. See this venture as a new business where you want to your one and only customer to only have good things to say about you when they decide to move on. 

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