By, Ted James
If you’re up for the responsibilities that come with being a landlord, then renting out your home can be a great investment. Cash flow, tax deductions, and building your investment portfolio are just a few of the many potential benefits. In order to set yourself up for success, however, it’s important to know what you’re getting into and come at it with the right approach. Hopefully, the tips below can help you do just that.
Find the right second home.
Before you get too carried away planning to convert your current home into a rental property, you want to make sure you find a new home that meets your needs. Not only will this ensure that you have somewhere to live, but it will also give you an idea of where you stand financially so that you can plan your budget for the rental property (e.g., repairs, improvements, marketing, etc.).
Part of house hunting also means shopping for interest rates and loans. And you will quickly realize there are a number of choices when it comes to loans. One of the most common types is a conventional loan, which provides several down payment options and allows the home buyer to choose between a fixed-rate and adjustable rate mortgage.
Make sure the rental property is safe.
One of the most important parts of preparing your property as a rental is ensuring its safety for tenants. This includes evaluating the structural integrity, which might require repairs to the roof, foundation, floors, and so on. Also, look for any minor issues that need to be addressed, such as missing tiles, broken steps, loose boards, and the like. While you were at it, consider what kind of security system to put in place.
Handle simple DIY improvements.
When you’re looking at your property and trying to determine what improvements are needed, start with the smaller ones. You might be surprised by how big of a difference minor upgrades and changes can make, and you may be able to forgo some of the major improvements you expected to make.
For example, consider replacing the hardware on your kitchen cabinets, shower/bathtub, and sinks. Put a fresh coat of paint wherever it’s needed, and replace any outdated light fixtures throughout the home. Boost curb appeal by doing some basic landscaping, painting the front door, and replacing the mailbox and house numbers.
Consider major improvements.
Even if you love your current home, you might need to make some big changes for it to appeal to renters. For instance, if you have a lot of carpet in the home, consider putting in some hardwood or laminate floors.
If your kitchen and bathrooms could use some work to attract a wide range of renters, consider budgeting for remodels. And if your roof is too old or damaged, a full replacement could be in the works. There are plenty of other improvements that can help your home stand out, but these are some of the most common.
Take extra precautions.
Finally, you will need to take some precautions in regard to the COVID-19 pandemic. Even though restrictions are loosening in many parts of the country, it’s essential to handle communications and transactions with tenants safely.
This might include showing your home to potential tenants virtually (e.g., live video chat, virtual tours, etc.). It might also include implementing a no-contact policy throughout each process, such as online applications, online screenings, and remote lease signings and renewals.
Renting out your home instead of selling it can be a great opportunity to bring in additional income and grow your investment experience. Once you find your next home, determine what changes you need to make to your property to make it safe and appealing to tenants. And be sure to take any necessary precautions related to the pandemic. In no time, you could be a successful landlord!