Change is inevitable and as a property owner, this can be stressful. You may find yourself needing to move due to a job transfer or to be closer to family.
As a homeowner, your first instinct might be to put your house up for sale. Naturally, you’d be scouting for a buyer with the highest bid. However, the market may not be on your side at the time you’re looking to sell. So, what else can you do?
Rather than selling your home for less than it’s worth, you can always convert it into a rental home! This provides you with more waiting time until the real estate prices pick up. You can also avoid the added pressure of trying to sell your home quickly.
Transforming your current home into a rental unit can provide you with a lot of benefits such as:
- Earning extra passive income and paying off your mortgage loan with it. You can also use the rental income to cover your property renovations.
- Generating a higher property value in the future due to appreciation. You will end up with a higher profit when you finally choose to sell your home when the market is favorable for sellers.
- Gaining additional tax deductions from your rental costs. This lowers the tax you need to pay off.
If this sounds great to you, you can apply these tips in turning your home into a rental:
Understand a Landlord’s Responsibilities
The reality of self-managing your rental property is you must be available to perform various maintenance tasks, resolve tenant concerns, market the property when it’s vacant, screen prospects, and respond to emergencies. You’re the go-to person for your renters while also doing any other tasks associated with keeping the rental habitable.
If these duties are too much for you to perform, you can opt to hire a property management company. You’ll have access to support given by skilled professionals. They can help market your unit, collect the rent, screen the tenants, and maintain your rental in excellent condition. This provides you with greater time freedom.
Review if You can Apply for Another Mortgage
Deciding to move to a new place might require you to apply for a new mortgage. Before leaving your property, find out if you can qualify for another one.
Some lenders or financial institutions are open to approving a mortgage loan knowing that you’ll be earning additional income from your rental space. However, this is not guaranteed so it’s best to do a consultation beforehand.
Update Your Insurance Policy
The insurance for a residential home differs from a rental home. You need to get a landlord’s insurance plan for better protection. Rental units tend to deteriorate more quickly over time and are subject to more natural wear and tear. Thus, a landlord’s insurance costs more than a homeowner’s insurance.
In particular, your rental place will have coverage when it comes to the following:
- Damages to the structure
- Accidents that happened on your property
- Financial loss arising from property damage
- Property issues resulting from natural disasters
- Court fees should lawsuits be filed
Schedule a Thorough Property Inspection
Before entertaining the idea of welcoming renters into your home, it’s advisable to have it inspected. Engaging the services of a home inspector is beneficial since you can discover hidden issues before they become larger.
Common home problems generally point to pest infestation, hidden leaks, and mold and plumbing issues which should be resolved immediately. Being proactive and getting them fixed will prevent you from spending more later since the damage will only increase as time passes. Be prompt in-home repairs to make your tenants happy and retain them as loyal renters.
Note that while converting your residential house into a rental space brings in extra income, it also means dealing with more maintenance expenses. You have to budget for repairs, regular cleaning, and replacement of damaged items caused by renters or due to the inevitable wear and tear.
Assign the Right Rent Price
Before you’re able to market your property, you need to sit down and consider the rental price. Start by conducting market research. Head online and compare rates with similar units in the neighborhood.
Keep in mind that you also need to set aside part of the rental income you’re receiving to pay off your maintenance expenses and mortgage if applicable.
Hiring a third party such as a property management company is once again advisable. Together with assisting you on various property management tasks, they’re also experts when it comes to setting an accurate rental rate.
Get Your Property Rent-ready
Important amenities to focus on include kitchen and bathroom upgrades when looking to get the property ready for renters. Then move on to your HVAC systems.
Once you’ve ensured that they are functional and the damages are addressed, it’s time to turn your attention to your property’s curb appeal. Make improvements by giving the rental a new coat of paint. You can also update your landscaping.
If you’re renting out a furnished space, then examine the furniture inside your rental. They should be in good shape, including the appliances. In addition, you can attract more potential tenants by having your rental unit deep cleaned by specialists.
Deciding to convert your place of residence into a rental property is one option to avoid selling your home in bad economic times. But it’s also a big undertaking to operate a rental home on your own.
To learn more about the best practices in managing a rental, you can hire a property management company. With their industry experience, you’ll feel confident that you’re delivering high-quality service and protecting yourself from costly mistakes.
Contact Evolve Nevada to find out more about the property management services we offer to maximize your returns!