If you have decided to turn a condo, single-family home or vacation home into a rental property you may be wondering where to start.
How to turn your home into a rental property
Homeowners insurance is not sufficient for a rental property. This is because when one rents out their property, they assume a degree of responsibility for their tenants’ safety. This is generally for incidents that are beyond the control of a renter. For instance, if a tree or other structure on or around the grounds fell and damaged the house or caused an injury, the landlord is held responsible. The same is true when there is an explosion because of a gas leak.
For this reason, one should take out a rental property owner insurance policy to cover the cost of repairing damage and injuries caused by accidents. Some policies also reimburse an owner for lost rental income if a renter damages a property to the point that it is uninhabitable.
Different cities have different permit requirements. However, generally speaking, rental property owners are required to have a permit. The main purpose for requiring permits is safety. Local government inspectors visit and inspect rental property to ensure that there are no potential safety hazards such as faulty electrical wiring. They will also inspect the HVAC equipment and other safety measures such as ensuring emergency exits in case of disasters like a fire.
Repair, maintenance and upgrading
It is important that rental property is maintained in good condition to attract and retain tenants. Also, upgrades add aesthetic as well as financial value. An upgrade like a swimming pool or roof terrace would justify charging higher rent than other units in the same area that do not have these amenities. Upgrades and improvements can be done a little at a time. Simple maintenance like a coat of paint from time to time, power washing walkways and new appliances also make a lot of difference.
Coming up with the rental charges
Renting out property is a business like any other and it should bring in a profit every month. Do a check of what is being charged for similar units in the same location so that you don’t charge an amount that is too high or too far below the average amount. Also, factor in any costs of upgrades; they should give you better returns.
There are several factors to consider when choosing tenants. One is that there are Fair Housing Laws that do not allow some categories of potential renters to be discriminated against. For example, a tenant may not be turned away for their race. Secondly, it is important to run a background and credit check on a renter before giving them tenancy. This verifies they can afford to pay rent/are likely to pay rent and that they do not have a criminal background.
When a property is rented out, it has to be on the basis of a rental or lease agreement. It is a legally binding document that needs to be drawn up in accordance with local rental property laws.
Leave it to the experts
Preparing a property for rental status can be challenging for a property owner, more so if they do not live in or around the area. Hiring a full-service property management company is the best way to ensure that the process is handled well and following the local laws. A reputable company will handle all the legal requirements and others that may arise such as tenants failing to pay their rent as agreed. To make the most of passive rental income, it is best to pass on the job to the experts.
Son-Rise Property Management has been serving the property management needs of Bellingham and Whatcom County since 1996. Contact us today to see how we can help you find a rental property for your family or manage your rental properties.