Steps for Transforming Your Home into a Rental Property
Thinking of turning your home into a long-term rental? There are several different reasons why homeowners make this decision. If your home has been on the market for a while and you’re having trouble getting offers at your asking price, renting it out may be a better option than taking a loss on your sale. Or perhaps you’re interested in real estate investing and want to test it out on the home you already own. Whatever your reason, renting out your home can be a great way to generate income, qualify for substantial tax deductions, and gain real estate experience. If you’re considering this move, check out the following steps to get started!
Consider Coronavirus Challenges
Before putting your home on the rental market, make sure you understand how the coronavirus pandemic has impacted housing. According to Forbes, COVID-19 has resulted in some serious disruptions to the rental market as low-income renters struggle to make payments amid job losses. This could create problems for you as a landlord. If your tenants are unable to pay rent, you could face financial difficulties yourself. Plus, rental demand has dropped as a result of the virus, leading to lower rental rates across the country. Make sure you’re prepared to navigate these challenges!
Make Repairs and Upgrades
If you decide that renting out your home is still a good option, start by making some repairs and upgrades to your property. According to BiggerPockets, some of the most common rental property repairs include broken appliances, water leaks, dripping faucets, pests, and water heater failures. Make sure every element of your home is operating smoothly before renting to tenants so you can keep your renters happy and avoid paying for expensive emergency repairs. You may even want to go a step further and upgrade your rental with some renovations and amenities. Replace dingy carpeting with hard floors, add a fresh coat of paint, install new windows, update the light fixtures, install a smart thermostat and consider adding 5G home internet, which is now available in the Denver area.
When it comes to paying for repairs and upgrades, you have a few options. For example, you could refinance your mortgage to free up some cash from your home equity. Refinancing has the added benefit of reducing your interest rate and monthly mortgage payments! If you’re interested in a refinance, reach out to Popish Mortgage to find out which option is right for you.
Set Your Rental Rates
Setting rental rates may be harder than it seems. You have to consider all kinds of factors in this decision, including your monthly expenses, ongoing maintenance costs, and even the time you spend managing your rental. But you can’t just set your rent based on your own expenses. Setting your rent too high will make it difficult to find tenants and you may be left facing long vacancies, so it’s important to research the average rent in your area and the overall demand for rentals. One easy way to do this is to look up rental listings for similar homes in your neighborhood!
Update Your Insurance
Before welcoming tenants onto your property, check your home insurance policy. There’s a good chance that your existing insurance won’t cover any financial losses associated with your rental property. Make sure your property is covered with a landlord insurance policy. Landlord insurance will cover everything from tenant damages and legal costs to natural disasters, so it’s a no brainer!
Learn How to Be a Landlord
Finally, make sure you’re prepared to be a landlord before you take on this demanding job. Landlords have all kinds of important responsibilities, including finding and screening tenants, maintaining the property, collecting rent, and responding to repair requests. You will also have certain legal obligations. Failing to comply with local rental laws and regulations could leave you vulnerable to fines and lawsuits!
Depending on your situation, renting out your home may be a better option than selling. Just make sure you understand all of the steps involved! From making essential repairs to following your legal obligations as a landlord, taking the time to properly prepare your home for long-term tenants will ensure your first rental property is a success. If you have questions about your home loan or refinancing, please contact us at Popish Mortgage Group today.