Are you thinking about converting your home into a rental property? While this is a great way to earn additional income, transforming your home into a rental is not a simple task. There are many steps you'll need to take before you begin renting your property.
In this post we'll cover some of these steps, so that you can begin converting your home into a great rental.
Step 1: Learn the Local Rental Laws
Once you've decided to become a landlord, it's important that you take the time to learn the local landlord-tenant laws of your area. These laws will govern both you and your tenants and following them will help prevent you from running into costly and stressful legal issues.
It’s your responsibility as a landlord to be aware of these regulations so that you can protect yourself and not infringe on your tenants’ rights. For example, you must abide by the Fair Housing Act, a law which prevents you from discriminating against your tenants. As early as the tenant screening process, you should already be knowledgeable about the protected classes. Otherwise, you risk facing negative consequences, such as a lawsuit or penalty.
Step 2: Conduct Repairs and Upgrades
Before signing a lease agreement with your first tenant, take the time to assess what needs to be fixed in your converted rental home. It’s best to check every corner and perform repairs and upgrades before tenant occupancy so that you don't run into issues after they've signed the lease agreement and moved into your property.
If you live in a neighborhood with numerous rentals available, this can also help you make your property more competitive on the local market. One of the best ways to accomplish this is to beautify your property. The curb appeal of your home will help attract more prospective tenants to your property.
For example, you can repaint your property to make it look bright and inviting. You could also plant flowers or shrubs along the driveway or front walkway if there is one. An attractive property is valued more highly than the alternative and will make marketing your property easier.
Step 3: Set the Best Rental Price
Once your property is converted and ready for you to begin marketing it, you'll need to assess its value and assign it the correct rental price. Start by checking out rental properties offering similar features to yours in the local area. See how much they are renting for so that you can price yours comparatively.
The rental price fluctuates constantly depending on the current economy, so you need to take this into consideration before determining how much to charge. If your price is too high, your rental might end up vacant for long periods of time. This will mean you don't have any income to counteract your running maintenance costs.
If your price is too low, your potential returns are compromised and tenants may be wary of your property. By pricing your property correctly, you can rest assured that you are maximizing your returns without scaring tenants away.
Step 4: Find Tenants
To make sure your property is a lucrative investment, you’ll need to market it correctly so that you can find a tenant. It's good to determine what type of demographic you want to reach for your rental so that you can specifically tailor your marketing attempts to that target. For example, if you're looking to rent to students, you'll have to customize your marketing strategy accordingly.
Using a combination of online and offline marketing is the best way to get a large pool of prospective tenants. The digital marketing sphere is often more convenient, cheaper, and efficient than using word-of-mouth in your local social circle. Take advantage of the ease of online marketing to engage more with your target prospects so that you can fill your vacancies quickly.
Step 5: Assess Your Suitability as a Landlord
If you're juggling a lot of personal and professional engagements, being a good landlord can be challenging. You need to make sure that you're responding to maintenance requests right away and filling your vacancies as quickly as you can. This can take up a lot of your time.
If you're not sure that you have the necessary time or you find being a landlord too stressful, you should consider outsourcing your responsibilities to a team of professional property managers. They can help alleviate your stress while still maximizing your investment returns.
Step 6: Employ the Services of a Property Management Company
If your aim is to obtain peace of mind while generating passive income, it’s a good idea to hire a property management team. They can help you avoid making many of the costly mistakes that new landlords often make. While they handle the stressful task of actively managing your property, you'll have more time to devote to other things.
A good property manager will be professional in handling any critical emergencies, defusing potential tenant conflicts, maintaining the property, and more. Additionally, property mangagement companies often have advanced software that can make some of the tedious tasks, like collecting monthly rent payments, far easier and more convenient. It's definitely worth investing in a property manager to help you have a more successful rental property in the long-term.
Converting your home into a rental space requires a lot of time and preparation. While you can accomplish it on your own, a property manager can often make the task of being a landlord far easier. If you need one, get in touch with Draper Realty at (405) 401-8100.