Renting out a property can be intimidating for a property owner, but there are several ways to go about it. One option is “For Rent by Owner,” also known as FRBO, which allows landlords to manage the rental process independently without the help of a property management company or a real estate agent. In this guide, we will explore what “For Rent by Owner” means and examine the pros and cons.
What Does “For Rent by Owner” Mean?
“For Rent by Owner” means that you, as a landlord, are managing the entire rental process by yourself. Therefore, you’re responsible for listing the property, hosting tours, creating lease agreements, and dealing with any additional issues.
The alternative to not managing the property yourself is hiring a property management company. A property management company can help you manage your property by collecting rent and responding to maintenance requests, but they usually charge monthly fees.
Suppose you choose to list your property on your own. In that case, you can list your property on Apartments.com, where you can write a property description, upload photos, include your contact information, and interested renters can apply directly on the website. You can also screen your tenants and create a fully customized and state-compliant lease.
Why Do Tenants Want to Rent from Private Owners?
Tenants often have various reasons for wanting to rent from private property owners rather than a large-scale apartment community. Below are common reasons why tenants prefer to rent from private owners.
Cost
Sometimes, renting from private owners can be cheaper than renting from a large-scale apartment community or a property management company since they do not have the overhead costs. Plus, as a private owner, you can be more flexible and offer a competitive rent rate that reflects the local market and condition of your property.
Flexibility
As a private owner, you may be more flexible in negotiating terms of the lease and rent, which allows tenants to find arrangements that suit their needs.
Tenant-Landlord Relationship
Some tenants prefer renting from private landlords because they can establish a closer and more personal relationship, which can be helpful for you if you ever need to address a tenant on an individual issue.
Pros and Cons of Listing Your Rental FRBO
Becoming a private landlord can be rewarding, but it has some advantages and disadvantages. Below are some pros and cons of listing your rental FRBO.
Pros of Being a Private Landlord
- Full control of the property: As a private landlord, you will have complete control over properties, allowing you to decide everything from rent prices to lease terms. But as a landlord, you must follow state and federal laws. Therefore, failure to comply can lead to legal issues.
- Passive income: Owning a rental property and renting it out can help you pay for the mortgage and make some passive income.
- Tax advantages: As a landlord, you will benefit from various tax deductions, including mortgage interest, property depreciation, and other property-related expenses.
- Save on management fees: By not hiring a property management company, you will avoid paying property management fees, which can be anywhere from 8% to 12% of the monthly rent.
Cons of Being a Private Landlord
- Time-consuming: Managing a property is not easy, and it requires time and effort to list the property, find the best tenant, collect rent, handle repairs, and more. If you have a career or family, being a landlord can get in the way of this, so be sure you understand what you are getting yourself into.
- Legal Complexities: As a landlord, you must familiarize yourself with the landlord-tenant laws in your state and city, fair housing regulations, and local ordinances to protect yourself and avoid legal issues.
- Tenant issues: Dealing with tenant issues such as late rent, property damage, or evictions can be stressful.
How to List Your Property as FRBO
If you have looked at the pros and cons of being a private landlord and still have decided to be one, below are a few steps to list your property for rent by owner.
- Prepare your property: Before you list it, it is essential to ensure it’s in good condition and ready for renters. Clean and repair anything damaged, and give each room a new coat of paint if needed.
- Set a Rent Price: Research the local rental market to help you determine a competitive rent price. If you decide to use Apartments.com to list your property, you can download rent comparables, which provide you with the rent prices of properties with a similar number of bedrooms and bathrooms. Setting your property at a competitive yet fair price can help you attract tenants.
- Take Photos: Photos are an essential part of a listing, and high-quality photos can help you attract potential tenants. Take clear, well-lit photos of every room and include a picture of the front of the house so anyone viewing the listing can get a clear idea of what to expect.
- Write a description: Craft a detailed and compelling property description that highlights the key features and benefits of your property. Include information about the number of bedrooms and bathrooms, any amenities, the neighborhood, and any specific rules or policies.
- Post your Listing: After you have set your price, taken photos, and have written a property description, it’s now time to post your listing. Once you have posted your listing on Apartments.com, you can start accepting applications. From there, you can screen tenants, accept or deny them, and send them a lease all through Apartments.com rental tools.
In conclusion, becoming a private landlord offers several potential benefits, such as control over your property and the potential for financial gain. However, it also involves a lot of responsibilities and risks that require time and effort. Prospective private landlords should carefully weigh these pros and cons and be prepared for the commitment of managing rental properties independently.
