Are you thinking about investing in real estate? One of the best ways to go about it is to turn your house into a rental home.
Buying a separate property to rent out will come with a high-interest rate. You’ll also have fewer surprises to contend with.
You already know about your home’s quirks and repair needs. You’ve lived there. You also have the advantage of being able to prep your house for rental while you’re still occupying it.
Of course, being a landlord isn’t for the faint of heart. There are plenty of things you’ll need to be prepared for. Continue reading to learn more.
1. Double Down on Your Insurance Policy
Once you turn your house into a rental property, having a regular homeowner’s insurance policy is no longer enough. You need to buy landlord insurance.
This way, if the house needs extensive repairs, you can meet the needs of your tenants without emptying your wallet.
2. Make Sure You’re Ready for the Responsibility
Being a landlord is a lot of responsibility. You’ll need to stay on top of rental laws. You can view here for more on that.
You’ll be on call for your tenants. When they need a maintenance issue worked out, it will be up to you to hire someone to make the necessary repairs.
As much as you like your renters, you have to be willing to handle the heavy stuff. There may come a time when you have to kick someone out for not paying their rent.
If a tenant causes damages to the property that exceed the security deposit, you might run into trouble when it comes time to charge them for it.
3. Obtain the Proper Permits
You’ll most likely have to get permits to operate your residential home as a rental.
You may have to schedule an inspector to come check your house for hazards. They’ll give you a list of upgrades that you’ll need to make before you can legally rent out your space.
4. You May Need to Refinance Your Mortgage
Renting a home that you live in or used to live in can be a smart move from a price standpoint. Mortgages for a rental house often come with outrageous interest rates.
The problem is that if you get a regular mortgage, lenders are going to expect you to be the one living in the home. You may have to refinance your existing mortgage if you plan to rent the space out.
5. You’ll Need to Make Upgrades and Repairs
Before selling your home, you need to perform upgrades and repairs to make it appeal more to buyers. You’ll have to do the same for rentals, and it can get pretty expensive.
Remember that you’ll have to factor any major repairs into your rent. That means you’ll want to keep your updates as cheap as possible.
Transform Your House Into a Rental Home
As you can see, there’s a lot you’ll need to consider before transforming your house into a rental home.
If you’re not prepared for the responsibility that comes with being a landlord, it can be a bit overwhelming. You’ll also have to make extensive repairs, and you may have to refinance your mortgage. However, if you’re willing to do these things, your rental property will provide a lucrative source of income.
For tips that will help you get your house ready for renters, visit the Renovate section of our blog.