Turning Your Home Into a Rental Property
When you decide to move out of your home, you have two choices. You can either sell the property or turn it into a rental. There are many advantages to becoming a landlord, but it is not for everyone. The following discusses some of the big steps involved in doing so.
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Deciding Whether to Rent or Sell
There are many factors that go into deciding whether to sell your home or rent it out. Check out real estate sites to see how long homes in your area have been on the market and what they have been selling for. Compare this data with information about local rental properties. Find out if there is a strong rental market. Are there units that have been empty for extended periods of time? Are rent prices strong compared with other nearby areas?
Even if your property is located in an area with a strong rental market, keep in mind that preparing and maintaining the property can be time-consuming tasks, and dealing with tenants is often a headache. Hiring a property manager can help with these issues but will decrease your overall profit margin.
Preparing the Home
When renting out your property, you want to make it as attractive to potential tenants as possible. Many upgrades you can likely do yourself, but some renovations are best left to professionals. Roof repairs, plumbing and electrical work all should be completed by professionals. When renovating, keep in mind that certain features are particularly popular. For example, data show that over 75% of renters consider not having a washer and dryer in the rental unit a deal-breaker. Choosing the right paint and flooring material is also important. The following features are ideal when selecting paint and flooring:
• Neutral color
• Easy-to-clean
• Durable
Updated kitchens are often appealing to renters. In the kitchen, make sure the appliances are all the same finish and in working order. Consider updating the countertops and painting the cabinets. Look at new or renovated homes for sale or watch remodeling shows to see what is currently popular.
Bathrooms are another area to focus on when preparing a property for tenants. Invest in storage solutions and durable materials. If you are in a market that prioritizes eco-friendliness, choose a low-flow shower head and toilet.
No matter how attractive your property is, a strong marketing strategy is key for finding tenants. Post the property to online sites for greater visibility, but don’t forget a classic “For Rent” sign in the yard to draw in passers-by.
Forming an LLC and Other Means of Protecting Yourself and Your Investment
An excellent way to shield your personal assets from liabilities associated with your rental property is to form a limited liability company. Research the rules in your state and consider filing the paperwork yourself to avoid paying a lawyer. Research tenant rights to protect yourself from lawsuits, and consider purchasing landlord insurance to protect the property itself. To find good tenants, carefully screen all applicants. Someone with a steady income and good references is likely to pay rent on time and not destroy the property.
Choosing to rent out your home rather than sell it is a big decision. Fortunately, careful decision-making, selective renovations and certain protective measures can help you make the right choice and get the most out of the experience.
Photo Credit: Pexels
Article compliments of Clara Beaufort
