If you find yourself relocating to a new city for your career or to expand your horizons, you might be thinking about what to do with your current residential home. Barring selling the property you can also choose to convert it into a rental property.
The advantage of this decision is that you gain a passive income every month. What’s more, you don’t have to resort to a quick sale, especially if the market favours the buyer. You can instead manage it as a rental while waiting to benefit from the property’s appreciation.
Another thing is that there are also tax incentives if you own a rental property. Associated expenses with the rental can reduce the tax amount you need to pay. If this sounds great to you then it’s time to transform your house of residence into a rental property.
Here are steps you can take:
Understand a Landlord's Responsibilities
Not everyone is suited to be a landlord. You need to have a lot of patience and time, and be able to resolve issues quickly. Apart from that, you need to be available often to cater to your tenants’ needs.
From handling tenant maintenance requests and performing property inspections to collecting the monthly rents, a landlord's job is never really done.
If conflicts arise, you’re also expected to find a resolution and prevent it from escalating further. Are you short on time? Do you prefer a hands-off approach to owning a rental? If yes, it’s best to hire a property management company.
Though you’re expected to pay a management fee, you also earn a lot of benefits. This includes carving more time for yourself and gaining peace of mind.
Check if You can be Approved for Another Mortgage
Since you’re moving out of your residential home, it’s important to know if you can apply for another mortgage. This provides you with more finances to own a new home.
Note that being approved for a second mortgage remains the decision of the lender. Just ensure that you weigh your options when looking to convert the property into a rental space.
Review Your Insurance Policy
Understandably, your homeowner’s insurance is limited. For your rental home, you need to get landlord insurance which is more suitable to protect your rental unit. Given that rental spaces tend to be affected by wear and tear often, landlord insurance is more costly.
Typically, landlord insurance gives protection to rental properties in terms of:
- Structural damages
- Legal costs
- Damages borne from natural disasters
- Rental income loss when your rental unit becomes uninhabitable
Do a Thorough Inspection of Your Property
Consider engaging the services of a home inspector before deciding to rent out your property. This will let you know if some damages and issues require your immediate attention.
Common housing damages are caused by pest infestation, plumbing, and structural issues. You should resolve them before opening your doors to tenants.
Being proactive helps eliminate future troubles and complaints. You must present a functional and safe home as a landlord. This creates a good impression leading to tenants staying long-term and will ensure that the property complied with rental laws.
Prepare Your Property for Tenants
Several ways exist to find great tenants for your rental. You can perform various improvements such as adding a fresh coat of paint. Another thing that attracts renters is by boosting your curb appeal through proper landscaping. You can also focus your renovations on the kitchen and bathroom.
Before accepting property viewing requests, ensure that your rental home is clutter-free and in a pristine state. Engage the services of cleaning specialists to achieve this goal.
Assign the Right Rent Rates
Setting the right rent price requires careful analysis, especially for new landlords. Set the price too high and you’ll have a hard time landing a tenant. On the other hand, if the rent is set too low, you’ll be missing out on passive income.
There are several ways you can ensure that the price is set at a competitive but fair rate. You can start by checking our similar properties online and looking at rentals in your area. This provides you with data on the ongoing rent rates.
Another way to ensure that you set the optimal right price is to hire a property management company. Given their knowledge of the area and industry experience, they’re able to determine an accurate rent price for your property.
Draft Up Property Policies
Before allowing a tenant to stay in your rental property, you need to establish some rules. If you have vague terms and conditions, you can’t fault the renters for failing to keep up with their responsibilities.
It’s much better to design a solid leasing agreement that’s clear and specific. It will leave little room for misunderstandings and prevent conflicts.
Some details you can include in the lease agreement are:
- The number of occupants in your rental home
- Whether pets are permitted on your property
- Rent collection policies and late fees
- Who’s responsible for which kinds of property maintenance and garbage collection
The more detailed your conditions are, the better. This creates more awareness for your tenants regarding the duties they need to fulfill.
Converting your home into a rental property can be an excellent alternative to selling it. However, property owners must also recognize that being a self-managing landlord can require you to develop a ton of new skills. If you lack the experience or time to manage a rental home, you can choose to hire a property management company.
The team at Cressman Realty & Property Management offers full-service property management solutions. We are dedicated to providing excellent customer service and helping property owners achieve peace of mind. Contact us today to know more about the range of property management services we offer to landlords.