How to Turn Your Home into a Rental Property
Being a landlord or turning your home into a rental property is a great way to earn extra income, especially long-term. This is a smart investment move, but there are many things you need to do before to ensure that you earn enough from your property as a landlord and avoid trouble. So, are you thinking about turning your home into a rental property? Here is a checklist of the important things you first need to do.
- Check for damages and make repairs
The first thing you want to do is ensure that your property is in perfect condition to rent. That means checking for damages in and out of the house and making necessary repairs. Inspect the roofing, plumbing work, toilets, and faucets to detect leakages and signs of water damage. You should check your staircase to ensure the handrails are safe and sturdy, and where needed, install new key clamp fittings.
After making the necessary repairs, consider upgrading outdated designs, appliances, equipment, finishings, etc. Also, take the time to provide the basic safety and security upgrades property needs.
- Get the necessary permits
Once your property is in perfect condition, you can move on to getting the necessary permits for a rental property. The requirements may differ depending on your location, but some of the permits you may need include a rental license, certificate of occupancy, and a zoning permit. You can contact your local municipality to find more info about specific permits you need. You can also find out if there’re any restrictions concerning the number of tenants you can have or inspections required on your property.
- Property rent charges
Next, decide how much you can or should charge for rent. Typically, landlords charge between 0.8% and 1.1% of their home’s value as rent. While you are the landlord, you cannot determine how much to charge arbitrarily. First, gauge the market and find out what other rental properties like yours in your location cost. Then, determine how much you’ll have to make each year to cover the expenses involved in managing your property. For example, calculate your maintenance costs, energy bills, utilities, insurance, taxes, etc., and subtract them from your gross income. The figure you have left should give you an idea of how much to charge.
- Insurance cover
Your rental property is an investment that requires protection from unforeseen circumstances. One of the best ways to protect your property is to get insurance coverage. Your regular homeowner insurance may not suffice, as you’ll have to get landlord insurance. That will protect your investment property from damage or loss caused by insured events and any loss of rental income that results. Take the time to select an insurance provider that offers the best package.
- Outsource or manage the property
Finally, you might want to decide if you want to bear the responsibility of managing your rental property or outsourcing it to a facility management company. If you’re only renting a room or two in your home, that should be easy to manage. If you have a large property for several tenants, hiring a facility manager may be helpful.
