Steps for Transforming Your Home into a Rental Property

Transform your home into rental property

Did you know it is estimated that there are around 43.3 million homes for rent in the US? As a result, many property owners realize that renting out their property is a great way to get a recurring income. But do you know how to get started?

Unfortunately, it is not as easy as you might think. Read on as we discuss the steps to transform your home into a rental property. 

Why Transform Your Home Into a Rental Property?

This comes down to one factor, and that is a regular income from the rental itself. This can be used to go into savings, supplement your lifestyle or even pay off the mortgage. In addition, as the property appreciates, you stand to make a lot of money in the long term. 

Start by Checking All the Permits

Having the right permits for rental properties is essential, as you don’t want to fall on the wrong side of the law. Many municipalities will have their own guidelines on this, so check them thoroughly. In addition, it may be worth speaking to a local property attorney regarding this. 

Check Your HOA

If you are part of a homeowners association (HOA), they may have their own rules and regulations regarding rentals. Check in the documentation you got when buying the property, or speak with the members who run the association. This article may help you work out what you need to know about HOAs

Research Taxes

Make sure you are filing the correct taxes from your home rental. Filing late or incorrectly can result in major penalties and fines. 

Check the Mortgage

Your mortgage will contain an occupancy clause, which states it is your primary place of residence. This entitles you to lower interest rates and smaller down payments. However, if the bank finds out you are not living at the property and renting it out, they could cause problems, so check the legalities before going ahead. 

Determine How You Will Manage the Property

Owning rental properties is very rewarding, but it is a lot of hard work. In fact, it is often easier if you have a lot of them and can do it full time instead of balancing them with a job. If you don’t want the hassle, consider hiring home rental companies to do it for you. 

Home Renovations

Check the property to see if any major renovations are required and budget accordingly. This article on surviving a bathroom remodel can give you guidelines on one of the most tackled rooms in the home. 

House and Landlord Insurance

Finally, protect yourself with the necessary insurance. Accidents are bound to happen, and you need to protect the home and yourself as the landlord.

Getting Started

Now you know the steps to transform your home into a rental property, you can begin earning extra income. Cover yourself legally, do your research, and make some renovations.

If you are thinking of buying, selling, or renting in the Salt Lake City area, Market Source Real Estate should be your first stop.

We even offer relocation services if you are new to the area. So contact us today and let us help you find your dream home. 

How to Find the Right Tenant for Your Rental Property

Tenant for Rental Properties

Did you know, 16% of low-income tenants cannot pay the full amount of their rent every month? So how do you prevent problems such as this from happening? The key is to make sure you find the right tenant for a rental property.

Doing so takes careful planning and follow-through. Let’s take a look at what you need to do to make sure you find the perfect tenant for your properties.

Set Your Own Rental Criteria

Well-thought-out rental criteria are key to making sure your future tenants will be a good match. A common requirement is that the tenant has a gross income of at least three times the monthly rent. This ensures they have the income to pay the rent.

You should also make sure they have steady employment or a co-signer with steady and sufficient income to ensure that your tenant will continue to pay their rent. You may also want to consider a minimum credit score.

Setting lifestyle requirements for your rental properties is also a good idea, especially for your primary residence. For example, will you allow smoking and pets in the unit? Some landlords also find it helpful to have requirements based on possible criminal history.

Get To Know the Applicant at the Property Showing

Showing the property provides a great time for you to meet and get to know the applicant either in person or virtually. As a result, you can better understand who they are and how to work with them.

Try to pay attention to how they act. For instance, do they show up on time? Do they seem friendly and nice to work with? These types of characteristics can indicate that they may be a pleasant tenant.

Check the Tenant’s Rental History

A tenant’s rental history can indicate how they will be if they rent from you. You should reach out to their previous landlords to confirm that the tenant actually rented from them and paid the rent on time.

In addition, ask if they took good care of the property and left the unit clean and in good order when they moved out. You can also check if they were disruptive to any other neighbors.

Research the Tenant Credit Report and Run Background Check

credit report can be a great tool to learn about the tenant’s payment and debt history. This can be an indicator if they will pay on time and be able to afford your rent.

You may choose to run a background check to see if the tenant has a criminal history. Just note that there are guidelines for using criminal background information if you are evaluating someone as a potential renter.

Use a Real Estate Agent

A real estate agent can make the process easier. Instead of going through each of these steps, an agent could take the lead on it. In addition, having a property manager or real estate agent can allow you to have a more hands-off approach to renting.

In addition, they can make it easier to ensure that you follow landlord-tenant law and don’t risk legal trouble by infringing on tenants’ rights.

Find the Perfect Tenant for Rental Properties

Finding the right tenant for rental properties can be an overwhelming process. First, you need to make sure you identify useful rental criteria and that your potential tenant meets them. However, a real estate agent can make finding a tenant and property management much easier.

Contact Market Source Real Estate to get started with your rental property today.

How To Prepare Your Home to Limit Your Liability for Rental and Investment Properties

Rental and Investment Properties
As an owner of rental and investment properties, knowing how to limit your liability is important.

Protecting yourself as a property owner doesn’t have to be complicated. But, many owners fail to take basic steps that could put them at risk for serious exposure down the road.

Fortunately, learning how to prepare your home for renting while limiting liability is pretty straightforward. Here’s how we recommend you go about it.

Get a Home Inspection

Limiting liability in your home starts with a home inspection, which gives you peace of mind that the structure and interior of your home are safe to live in.

It’s also a good way to assess the current state of your rental property. You may discover basic upgrades that you can advertise in your marketing campaign, enabling you to increase rent.

Get Renters Insurance

Renters insurance protects you (and your tenants) from bearing financial responsibility for minor and even catastrophic events.

There are different types of renters insurance—homeowners and landlord insurance are two popular options—that you should weigh the pros and cons with your specific property.

Have a Renter’s Checklist Available

As part of your rental and investment liability strategy, make sure both you and your tenants have skin in the game. You can achieve this by putting together a renter’s checklist that you and they walk through during move-in.

Have both parties sign off on the agreed condition of the home. That way, down the road, you’ll have proof that the home was that way if something happens.

Put Together a Home Inventory List

If you’re still wondering how to reduce landlord liability, make a list of every item in the home. By creating an inventory list, you can organize and plan out your rental and investment property duties.

An inventory list is also a good way to ensure things don’t go missing or get damaged without being noticed. Treat the large and expensive items the same as the smaller and less valuable—everything in your home that holds value should be on your inventory list.

Check Appliances and Make Necessary Repairs

Accidents and injuries caused by appliances result in about 1,000 injuries per year.

Compared to other issues, this number is relatively small. But keeping up to date on your appliance repairs is a great way to protect yourself and limit liability.

Do some research on how often appliances need to be checked and/or upgraded. Keep these on a spreadsheet and perform routine check-ins every 6, 12, or 24 months (or once a season, like spring) based on need. This will also save you money in the long run!

Make Sure You Have All the Permits

Permits are valuable documents that can prevent you from being held liable when an incident happens.

Acquire all the necessary permits—building, zoning, and any others needed for your area—to ensure you are protected in this way, too.

Get Your Unit on the Market With Us!

Thinking about putting your rental and investment properties on the market? Let us help you!

We can put your unit on the market and help educate you with additional resources that limit liability on your part as a landlord or tenant.

Contact us today to see how we can help you!

How to Turn Your Primary Residence Into a Rental Property

rental property

Did you know there are nearly 48.5 million rental units in the United States? If you’ve ever paid rent in a big city, you know how profitable a rental unit can be.

Now you own a house of your own, and you’re ready to move. Rather than put it on the real estate market, you’re thinking about making it pay over the long term and converting it into a rental property.

Sounds easy, right? Not so fast. There’s a lot you need to do to prepare your former primary residence for a rental property.

Obtain Licenses and Inspections

Turning your home into a rental home isn’t as easy as listing it for rent. To be a landlord and rent your property, you must first get all the licensing and inspections.

Depending on the state and city your rental unit is in, you’ll need a landlord license to transform your primary residence into an investment property. This licensing may include a business license and/or a rental license.

To turn your house into a rental unit, you’ll also need the proper municipal inspections and permits. An inspector looks at the residence to determine whether the building suits occupancy.

Do You Want to Be a Landlord?

The life of a landlord isn’t just collecting rent. You put your property and your mental well-being at risk.

Appliances break, pipes burst, and roofs leak. Tenants might not pay their rent on time (or at all), and then you’re involved in eviction proceedings.

In other words, owning a rental house and being a landlord is another job. Do you have the personal bandwidth to take this on?

Home Insurance

When you file the proper licensing paperwork to turn your home into a rental unit, your homeowner’s insurance policy covering your primary residence voids.

You’ll need to shop for landlord insurance that includes dwelling insurance, water or flood, and rental income insurance to cover lost rent.

Get Your Taxes Straight

Investment properties follow different tax rules than primary residences. Interest deductions change, and different laws apply.

For example, under current tax laws, you can deduct mortgage interest. You can also write off any other occupational expenses like repairs and maintenance work.

Before you begin renting your home, consult your accountant to get your taxes in order.

Prepare for the Rental Market

To make money, you need to establish the quality of your place so you can charge on the high end of the prevailing rental market.

Make any renovations necessary to make your house more attractive. This might mean updating the kitchen, the floors, and or major appliances.

The next thing you need to decide when you’re offering your home for rent is whether you’ll hire a property manager. If you do, you need proper worker’s compensation

Interest Rates on a Primary Home vs a Rental Home.

Primary home mortgages typically have a significantly lower interest rate than if you tried to buy a property strictly as an investment property. The mortgage company typically requires you to live in the home for 1-2 years before turning it into a rental. Once the 1-2 years is up, you can rent it out while still taking advantage of the lower interest rate. Plus, you can then purchase your new home at a primary rate as well. 

Turn Your House Into a Rental Property

Are you planning a move? Rather than sell your house, why not turn it into a rental property? It’s a great way to get involved in real estate investment and make money.

Are you ready to be a landlord? Get your unit on the market with us!