There are many reasons to get into the rental business, no matter what circumstances bring you there. Maybe you’re trying to sell your home but aren’t getting what you consider to be a fair price. Despite the impact of COVID-19 on the economy, now may still be the right time to make the jump, as Realtor Magazine has continued to see an increase of single-family homes built with the intent to rent, which can be seen here. So now that you know it’s possible, where do you start? Here are some step-by-step guidelines to help you convert your home into a rental property.
Apply For Another Mortgage
Usually when making your home a rental property, you want to find another place to live rather than sharing the building with your future tenants. If this is true for you, it’s a good idea to find out if you qualify for another mortgage before you continue making changes.
Check-In With Your Homeowners Association
If your home is in an area governed by an HOA, you should check-in and make sure there aren’t any rules set in place for rental properties before you start listing. Some have no restrictions, however, others only allow a certain number of rentals in one neighborhood, and others don’t allow rental properties at all. Whatever the case, it’s important to touch base and make sure you’re not violating any restrictions.
Change Your Insurance Policy
Rental properties tend to see more wear and tear than primary residencies, so you want to make sure you’re covered in case of an accident or emergency. Tenants could also try to hold you responsible for things that happen on the property, and insurance is another way to prepare for this.
Ready Your Property
Look at other rental properties in the area to make sure your house lives up to the competition. If they have more updated appliances, or have better amenities, it might be in your best interest to make some changes. A new coat of paint can make a big difference in making a property look new. Curb appeal also makes a big first impression, so investing in some landscaping could be a smart decision.
Set the Rules
If you don’t have strict guidelines from the beginning, tenants tend to take advantage and cause you to lose money. Consider things such as pet policy, occupancy, who will be in charge of yard maintenance and trash removal, and limits on your own right of entry. Once you make the rules, stick to them and be sure your future tenants understand that there won’t be leniency.
Create an Application Form
Before you begin looking for a tenant, be sure to have an application form ready for them to fill out. This should include things such as their full name, birthdate, social security number, current address, phone number, information of employment, and references you can contact. You may also want to charge an application fee to cover the cost of background and credit checks. Make sure the application covers any other information you might be interested in such as the number of people or pets, but be careful not to ask anything that could be considered discriminatory such as race or religion.
Find a Tenant
Now that you’ve prepared your property, it’s time to start looking for a tenant! List your property on sites such as Zillow, Craigslist, or your city’s Facebook page and get ready to start combing through applications. Look for automatic disqualifiers such as a gross monthly income lower than three times the amount of rent or no steady job of at least a year. No matter how nice people may seem when you first meet them, always be sure to run a professional background and credit check. Be patient, as taking the time to find a good tenant will save you a lot of time and money in the long run.