How to Convert Your Home Into a Rental Property

Are you considering moving into a new home and wondering what you are going to do with your current home? If so, this blog has you covered!

Generally speaking, you’ll have two options to consider. One option would be to sell your current home outright. You may then use the lump sum of money for anything you want, whether it’s investing in another property, making home improvements, or paying off debt.

That said, selling a home is not always easy. Factors like economic conditions and property conditions, among other reasons, can make selling a home less feasible. In such a case, what are you to do and you still gotta leave?

Luckily for you, there is another option that can allow you to keep your home in the meantime. And that is by renting it out! You can convert your current home into a rental property.

Renting out a home comes with a smorgasbord of benefits. If you do it right, you can earn a regular passive income, take advantage of bountiful tax deductions, and enjoy rising property appreciation rates over time, among others.

If converting your rental property is an option you can consider, then today’s blog is specially meant for you. Here are proven tips to ensure you do it right.

Understand the Roles of a Landlord

Landlording isn’t for the faint of heart. It is a responsibility that requires time, effort, and hard work.

So, before taking on the mantle of being one, first determine whether you are cut out to be one. The following questions should help you assess your qualifications.

• Do I have a legal understanding of the applicable federal, state, and local landlord-tenant law?
• Can I draft a solid rental agreement that protects me, my property, and even the tenant?
• What qualification criteria will I use to determine the kind of tenant that will rent my home?
• Am I ready to handle being a landlord 24/7?
• How will I be able to attract prospective tenants after a tenant leaves?

A property manager will gladly take on such responsibilities, freeing your time and optimizing your ROI.

Seek a Second Mortgage

Now that you’ll be relocating to another town or even state, you’ll need to apply for a new mortgage. Ideally, do this before moving out.

Just like with your first mortgage, your lender will consider a bunch of things to assess your qualifications. Including, your credit score, debt-to-income ratio, income and employment history, property type, and loan type.

Your lender may consider the potential income you stand to get from your current home, which might boost the success of your application.

Get the Right Insurance Policy

As a landlord, you’ll have the legal responsibility to insure your rental property against certain potential perils. For this reason, you’ll require a landlord’s insurance cover to ensure proper protection of your investment property. Your current homeowner’s insurance policy won’t cut it.

Unlike your primary residence, rental properties undergo more wear and tear. And it is for this reason that another cover is necessary. Generally speaking, a landlord’s insurance cover will help cover for things like:

• Structural damage to the property. For instance, cracks that can result from shifting or settling of the foundation.
• Damage or theft of your maintenance equipment.
• Damage or theft of sheds, pools, or other outdoor features.
• Minor injuries that can occur within the rental premises.
• Legal disputes that can result in fines.
• Damage to the property that can make it uninhabitable, leading to loss of rent.
• Damage arising from natural disasters, such as hail or lightning.

Inspect your Property Thoroughly

Before you can rent your property out, it’ll need to meet certain habitability criteria. Specifically, it’ll need to abide by certain health, safety, and building codes. And a thorough inspection can help you identify issues that may need addressing before listing it for rent.

Some of the issues that can make a property unfit for occupation by a renter include the following:

• Structural instability that causes sagging floors, cracks in walls or foundations, or signs of imminent collapse.
• Roofing problems, such as missing shingles, severe leaks, or a compromised roof structure.
• Infestations by vermin, such as rodents or insects.
• Mold or mildew that results from water damage or poor ventilation.
• Electrical problems, such as overloaded circuits, faulty wiring, or lack of ground fault circuit interrupters.
• Plumbing issues, such as sewer backups, lack of running water, or non-functional sinks or toilets.

Of course, fixing any or a combination of these issues will cost you money upfront. However, doing so will save you money later down the road and guarantee legal compliance.

Ready Your Property for Rent

Fixing repairs may not be enough to make a property rent-ready. You may have to go a notch higher and make certain necessary upgrades to the property to make it stand out from the competition.

You may have to do some paint touch-ups, for example, if the walls look like they have seen better days. A kitchen remodel may also be necessary to ensure it looks and feels modern.

Next, ensure that all appliances are working as they should. Any appliance you’ll include in your rental agreement will need to be in good condition and working properly.

Conclusion

Selling your home isn’t the only option you have if relocating to another locale. There is the option of renting it out in exchange for a potential passive income stream month after month. However, note that this will only be possible if you do it right!

Avalon Property Management is a valuable partner you can work with to ensure optimal rental returns.
We have been helping landlords in the North Metro Atlanta and Marietta areas achieve peace of mind since 1991. Get in touch today to learn more!