Has your local area suddenly become a hotspot for real estate? Demand can rapidly increase, especially when an area becomes gentrified.
Some enterprising homeowners seize this type of opportunity and decide to turn their home into a rental space.
Are you thinking about how a move like this can boost your income?
This article will help you figure out how to convert your residential home into a rental property in 6 steps.
1. Switch your insurance policies.
If you plan on joining the rental property business, one of the first things you'll need to buy is landlord insurance. Your existing homeowner’s insurance will only cover for damages and losses if you’re living in a residential home.
If you want to rent your property out to tenants, landlord insurance will be the best fit for your new needs.
Especially when paired with liability insurance, landlord insurance will make sure you are protected from the high costs of damages and losses pertaining to the rental property.
Why is insurance so important? Well, let’s say that your property has structural damage that has resulted in an accident involving a tenant.
The landlord insurance policy you purchased, in combination with liability insurance and your existing property insurance helps you cover the expenses from every part of the accident, which can add up quickly!
You’ll be covered against any repair and medical costs. If you’re a new landlord who doesn't have adequate budget for these incidents, then the insurance can help reduce your payments.
If you are in Nevada, this would also be a good time to double-check the landlord-tenant laws to fully understand your legal obligations to your tenants.
2. Learn useful landlord skills.
It’s tempting to think that as a landlord, you only need to concern yourself with collecting rent each month, leading to a passive income. The reality, though, is that landlords juggle plenty of responsibilities, which require you to learn some new skills.
A great landlord should have the following:
As a landlord, you can expect that you’ll be speaking with not only your tenants, but also vendors and licensed contractors. You’ll also be expected to mediate during tenant disputes.
You will need to be good at resolving tenant disputes verbally, as well as through written communications.
Excellent customer service
Since you want to retain your tenants for the long term, you need to cultivate your professional relationships with them.
The easiest way that this happens is by offering stellar customer service through prompt response to their requests and being attuned to their needs.
Treating your tenants well will ensure they’re happy staying in your rental property.
Becoming part of the rental business means you’ll be crunching numbers. Front rent collection to repair receipts, you will need to be able to track your profits and expenses.
That means you’ll need a strong financial understanding so that during tax season, you can file your taxes properly, and avoid any unpleasant surprises!
3. Take time to study your property.
Before you can start marketing, accepting tenants, and setting the rental rate, you need to objectively assess your property.
Determine the features, amenities, and what sets you apart from similar properties around your neighborhood.
It can also help to hire an expert to conduct a home inspection. An inspection can bring you up to speed about what renovations or repairs are necessary for your property.
Once you’ve gained insight on the property improvements to perform, then you can begin to calculate your budget. This step has the added benefit of ensuring that your property is attractive to your target market.
This can result in fewer vacancies. Moreover, you’ll know exactly what features to focus on with your marketing efforts!
4. Prepare your property for tenancy.
Your rental home must be ready for a tenant to move in.
This means that your furnishings are in their designated areas and the rental space is clean.
The appliances should all be in good working condition. All the housing upgrades should be completed beforehand, such as replacement of damaged items and repainting the unit.
Before you start marketing, you should make sure your rental home looks its best. This includes curb appeal.
Prospective tenants will be asking for a property tour, so you need to make every aspect of your property presentable.
You’ll also be taking photos and videos to post in your property listings, so make sure that your rental property is in prime condition.
5. Market your property effectively.
When your rental property is absolutely ready, you should turn your focus to marketing. Determine your demographics and who your target market includes.
Based on the amenities available in your home and the neighborhood, figure how to attract them.
It’s not good to welcome just any tenant that lands on your doorstep. You need to be selective.
Various marketing techniques are available to landlords such as advertising through signage, word-of-mouth, MLS or through the Internet. Check where your target market is likely to look for property ads.
Is it mainly through traditional marketing, like signs and flyers, or digital marketing, like social media posts and online listings?
Are you looking for retirees, young professionals or families? Once you know this, you can cater your marketing efforts accordingly.
6. Set the right price.
You will need to do some analysis to determine the proper rate for your rental. Compare the rates of similar properties in your neighborhood.
To find a rate that is reasonable, you’ll also need to look at the features of your own property.
If your property is recently constructed with newer amenities, then you can ask for a higher rate than the older rental units in your area.
Take into account the mortgage and your other property-related expenses.
If you deduct these, does your rental rate leave you with a profit? If not, you aren’t earning an optimal income for your efforts.
Assigning a rent price that is too low or high can result in low-quality renters.
You should be able to strike a balance, especially when you compare your rate to similar properties.
At the beginning, transforming your residential home into a rental property may seem to require substantial efforts.
But, if you prepare yourself, set up the necessary steps and safekeep all the important rental documents, you’ll be well on your way to enjoying additional income.
The good news? Owning a rental property is an asset that tends to appreciate over time.
However, not all property owners are equipped with the essential landlord skills. Some won’t also have the time to manage every aspect of the rental unit, including unexpected issues such as mail from previous tenants.
If you’re a property owner in Northern Nevada that feels overwhelmed managing your rental property, contact EvolveNV by calling us at (775) 398 2700. We manage single-family homes, student housing, multi-family, and commercial properties.