16 Aug How to Turn Your House Into a Long-Term Rental
There are different reasons for converting your home to a rental. Maybe the house was on the market and you figured it might take too long to sell it. It could also be that you inherited the property and you don’t want to sell it. Or, you’re among the many property owners looking to supplement their income by turning their homes into long-term rentals. Regardless of the reason, you must get the house in order, both physically and financially.
Here are a few things you should consider before you begin looking for tenants, brought to you by CMW General Contractors.
Establish a Business
If you haven’t already considered it, it’s a good idea to establish a limited liability company (LLC) from which to conduct your rental business. An LLC will protect your personal assets from judgment in the event of a liability issue, as well as save you money come tax time. It’s easy to establish an LLC online through a formation service. Then you’ll be ready to take on a rental business.
Take Out Insurance
Taking out a homeowner’s insurance policy is not enough if you want to use your home as a rental property. When you have people living on your property, you take a degree of responsibility for keeping them safe. Many unfortunate situations could occur, such as a tree falling on the home and injuring the tenants. You need to prepare beforehand.
With insurance, you don’t need to worry about handling repairs out of pocket. A good policy will also include third-party protection, so anyone injured on your property is compensated. In fact, look into landlord insurance, which combines liability and property insurance.
Apply for Required Permits
You need permits to operate your residential property as a rental property. The requirements for licensing vary depending on the state, so check with local authorities to know what you need. Before you receive a permit, an inspector will check the home for different safety hazards, including heating, electrical, and exits from the home.
After the property inspection, you will receive a report informing you of any changes, repairs, or modifications required to prepare your property for tenants.
Repairs and Upgrades
You will need to repair and upgrade your home to prepare it for tenants. In the same way that you would improve the home when selling, you need to renovate it if you want to attract tenants—and keep them. The cheapest thing is to clean and paint the home.
Additionally, replace things that look severely dated if the cost is not outlandish. For example, you can change the knobs and handles on the kitchen cabinets and faucets in your bathrooms. After implementing these changes, remember to include the cost of upgrades in the rental price. As such, try to avoid going overboard.
For all your rental renovation and remodeling needs, trust the pros at CMW General Contractors.
What Will You Charge?
Before listing a rental property, you need to sit down and crunch the numbers. Prepare a list of the costs you expect to incur, including property taxes and mortgage payment (if you have a mortgage), utilities, and what you spent on repairs and improvements. Add in estimates for maintenance and other required expenses while the tenant stays in the home. Use this calculation to determine how much you should take as a monthly profit.
Finding Tenants
To get the project moving, you need to find tenants for your rental property. There are many ways you can search and find tenants. You could use rental websites to advertise the property, or you could use social media. You can also use these sites to determine what other rental properties are charging per month.
Another option is hiring a property manager, who will handle the process of finding the right tenants. While searching for tenants, provide as much information as possible, including the number of bedrooms, pet-friendliness, and bathrooms, to name a few.
Show off Your Property
One great way to show off your rental property and its features to potential tenants is to create a video that’s accessible online. It’s easier than ever—you can use an online tool to combine video clips you shoot. Once you’ve edited the clips to your liking, you can download your video to share and use in rental postings.
Renting out your property is a great option if you want to supplement your income. It’s ideal if you have another property and don’t want to sell the home. You need to prepare the property by doing repairs, applying for your permit, and getting an inspection. Once you have all of this out of the way, you can use video to help attract your first tenants.