Turning Your Home Into a Rental Property

Feb 10, 2024 By Triston Martin

When it is time to move your family into an apartment, It can be a daunting task. You only have one option: offer your house to sell to compete for the highest price, and then take what the market has to give you. In certain situations, however, there's a different alternative. It is possible to turn your house into a rental. There are numerous reasons to consider making your main residence an investment property for rental, each with its advantages. Perhaps you've tried putting the property for sale, but you haven't been able to get the amount you want. Perhaps you're looking to move fast and don't want to sell your house on fire.

Take Out Insurance

The homeowner's insurance policy won't suffice when your house is an investment property. When you host people living on the property you manage, you assume the responsibility for their security. What happens if a tree falls on your home, injuring tenants? What happens if there's gas leakage that leads to an explosion? What happens if something minor becomes a huge legal problem?

Imagine if you bought the property with the sole goal of renting it out, and the tree caused such damage that large repairs need to be done, making the property unsuitable for rental. If you weren't covered by insurance, you'd need to make repairs to the house out of your pocket. This is something that not many people can afford.

It's why it's crucial to have an insurance policy designed specifically for landlords. Landlord insurance is a combination of liability and property insurance together. The property insurance that covers the home, as well as other components of the property like fencing and personal property, are protected from the possibility of damage or destruction. The liability coverage will protect you from the loss due to medical bills or legal costs if you are found responsible for injuries suffered by others within your property.

Get the Required Permits

Some municipalities require permits for residential properties to be used as rental properties. Permitting requirements differ by city, so it's best to inquire with the city hall to determine whether you need one. The reason for the permit is to protect. Most often, an inspector from your local government will check the property for security hazards, such as heating, electricity, proper exits from the property, as well as other safety and health concerns. The inspector will provide you with an inspection report and informs you of any required modifications, whether repairs or modifications are needed, to ensure that the home conforms. These permits aren't too expensive but essential for converting your house into an investment property.

Repairs and Upgrades

You may need to make improvements or repairs to your home--just as you would if they were to sell it, to increase its value and make it attractive to prospective tenants. The most cost-effective and easiest option is to ensure it's well-maintained and freshly painted. Any outdated furniture is best replaced, provided it's not too expensive. You could choose to replace the handles and knobs of your kitchen cabinets or faucets in the bathroom and the kitchen. Be aware that you must include the cost of these improvements in the rent.

What Will You Charge?

Before putting your rental on the market, you should take the time to take a seat and work out some numbers. Write down all the expenses associated with the property, including your mortgage payment (if there is one), property taxes, utilities, and cash you've used for repairs. Be sure to include your estimations for repairs, maintenance, or other expenditures you'll need to pay for while you are an occupant. Calculate the amount you'd like to consider a monthly profit. When you have figured out an estimated rental amount, look at nearby rentals to find a property that is similar to yours. This will give your an understanding of how competitive your price is compared to other landlords in the area.

Property Management Group

If the rental property you own is located far from your residence and you do not want to deal with the hassles of the day-to-day duties of a landlord, you should consider hiring a property management service to assist you. A property manager takes care of all paperwork, manages the repairs, collects rent, and communicates with tenants. Most companies charge an average of 10% of the rent for this service.

Property management companies can also help clients with the legal processes that are involved in the process of eviction. The process of evicting tenants is a legal procedure that requires an extensive amount of time and effort to finish. Although landlords cannot regulate their tenants' behavior, it's recommended to avoid eviction due to the time and expense involved and the possibility of damages to the property caused by unhappy tenants.

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