Owning and leasing rental properties isn’t just for major corporations or real estate professionals. Often landlords get started when they upgrade from their first home purchase to a bigger or more desirable home. As they buy new homes, they lease out their former homes to tenants. If you’re considering converting your old home or even your current home into a rental unit, here are a few helpful tips:
Get landlord insurance
Your normal homeowner’s insurance isn’t going to be enough if you decide to convert your home into a rental property. You’ll need to get landlord insurance that can help protect you against a wide range of liabilities. It’ll protect you against the standard risks like damage from natural disasters, but it will also shield you from liability if a tenant or a guest of a tenant is injured on your property. There are also some valuable add-ons that can help protect you against other risks landlords encounter like missed rent payments.
Get required permits
Permitting for any business in the United States can be a total nightmare. Big firms hire experts or consultants just to navigate this area. You’ll have to consider all the laws from the federal all the way down to the municipal level. If you have any questions you can reach out to your local government, legal experts, or a local group of business leaders.
Make repairs and upgrades
Making repairs and any upgrades can be costly. You’ll need to make sure that at a bare minimum, your rental unit is up to code before leasing it out. The next question will be what upgrades can you make in order to get the best return on your property. You don’t need to go over the top unless you’re trying to reach a high-end clientele.
If there’s a way to add another room to the rental without any huge structural changes, that is one way to increase the amount of revenue the property can generate. You’ll also want to look around your area and see what amenities are common. For example, are similar homes in the area including a washer and dryer, dishwasher, air conditioning or similar luxuries?
how much should you charge?
This is an area where hiring a local property management company can help. They would have access to all the data necessary in order to make up-to-date decisions about how much to charge for rent.
If you choose not to use a property management company, it’s recommended to at least use a software company to help manage and grow your business. If you need to figure out how much to charge on your own, you can look at various rental sites like Zillow, Craigslist, or Apartments.com and compare how much similar units are going for. You can also keep tabs long-term to see how long rental units are staying on the market.
Learn the laws
Housing laws are complex and it’s why landlords tend to hire exerts if real estate isn’t their area of expertise. You’ll need to know all the laws about keeping your rental unit up to code as well as all the laws around fair housing and tenant's rights. Not knowing all of this can put your business in jeopardy which is why it is wise to at least consult a legal professional before starting your business as well as if you plan on making any big decisions down the road just in case