Are you renting out property this summer? Property rentals can be a great way to generate income. But they can also involve a lot of work in finding tenants and managing the property. And sometimes the experience can become a nightmare when problems arise that end up costing you money. To ensure a more positive property rental experience, here are seven mistakes you should avoid when renting out your property.

1. Oral lease agreement or generic lease agreement

While your state may allow you to have an oral lease agreement, it’s better to have a written agreement to protect both you and your tenant. Generic lease agreement forms may be easier to use, but often they don’t cover everything they need to. Have a contract written up that covers items specific to your property, including late payment fees, pet policies, property maintenance, lease termination notice, and anything else you’re concerned about. A detailed contract will help you avoid future conflicts and possible lawsuits.

2. Illegal provisions in your contract

Your lease agreement should not include any conditions that violate state and/or federal laws. For example, you can’t require your renters to waive their right to sue you or to receive a security deposit refund.

3. Inadequate screening of potential tenants

It’s in your best interest to properly screen your potential tenants. Before approving the rental agreement, get the tenant’s written permission to obtain reports on his/her credit history, criminal record, and employment history, as well as references from previous landlords.

4. Discrimination of prospective tenants

Make sure you understand the fair housing laws. You cannot discriminate against tenants based on race, national origin, sexual orientation, religion, disability, marriage or family status. Make sure your rental listings and interviews with potential tenants don’t appear to discriminate against specific groups of people. You can only refuse property rental based on the potential tenant’s poor credit, inability to verify employment or lack of good references as the reason. Keep proper documentation to support your decision.

5. Insufficient Insurance Coverage

Don’t assume your rental property is covered under your homeowners insurance. You should buy landlord insurance coverage to adequately protect your property in the event of damages, accidents or other financial losses. Additionally, you can require your tenant to buy renters insurance to protect their personal belongings from theft or damage.

6. Inadequate home inspection documentation

Prior to your new tenant moving in, have them sign an inspection sheet which outlines the condition of the home. Also, take photos or video of the home to provide clear evidence of the home’s condition. This will protect you in the event of future damage which the tenant claims they didn’t make.

7. Property disclosure failure

Make sure you understand and comply with your state’s laws regarding home disclosures. You must notify your tenants of things like mold, lead, asbestos, or deaths on the property.

If you looking to buy a rental property, contact a reputable mortgage broker to help you sort through the mortgage loan process to find the right home loan solution geared to your needs.