5 Tips for Turning Your Home into a Rental Property

Do you have a plan on converting your home into a rental property instead of selling it? This is a long-term investment that has the potential to give you profits in the future. You need to prepare, insure, fit out and fix the place to change it to a rental property.  Here are 5 important tips to keep in mind when getting ready to make the switch.

Make Sure You’re Ready to Be a Landlord

Being a landlord is not very easy, it carries a lot of responsibility. Before becoming a landlord you must study the tenant and landlord laws. Every state has its own set of laws and rules, you must be familiar with your obligations as a landlord. Understanding the tax rule is mandatory. To get great results at tax time, you should possess the knowledge of what can or cannot be claimed on taxes. As a landlord, you might have to correct / schedule repairs at the given property and prepare for it.

Determine if You Will Need to Refinance Your Mortgage

When you purchased the home initially, you might have used a residence mortgage. This type of mortgage offers lower interest rates as well as lower down payments. Renting a property without running by its lender is not a good choice. It will be considered mortgage fraud and may end your mortgage due as soon as they discover you’re renting your property. One thing to understand is, that taking a mortgage on a residence is totally different from taking a mortgage out as an investment property.

Update Your Insurance Policy

When you start renting your property, keep the insurance updated. Your old homeowner’s policy might be expired so check and update. For a rental property, you want to purchase a separate policy as you will no longer need protection for the personal property inside.

Conduct an Inspection

Do a proper inspection of your property so that you are aware of any major issues. Check and do all the repairs before inviting potential tenants. The home inspection will be done by a certified professional, so you must follow a basic inspection checklist and prepare for it.

Set Your Rent And Find Tenants

If the property is ready, the next thing you should do is to set your rent and find tenants. Perform the calculations and fix the amount of rent you need. Rental income includes all the expenses like the taxes and mortgage payments if there are any—while making some profit on the side. After fixing the rent, look for tenants. Conducting a thorough screening process will help you get the best tenants for your property.

A rental property is an excellent way of making passive income and achieving financial success. But becoming a landlord can be an intimidating responsibility. Go through all the above tips and get a clear idea of where and how to start.