With rents at an all-time high, many people are considering converting their primary home into an income-generating rental property. While the rental property is a superb way to build wealth and diversify your portfolio, it can also be a very time-consuming endeavor that requires due diligence and hard work.
If you’re ready to take on the challenge, we’ve got our top tips below for successfully converting your home into rental property:
Do Your Research
This step is arguably the hardest and requires the biggest time investment. If you do not research the intricacies of your real estate conversion ahead of time, you’re almost sure to run into several roadblocks on the way. Do yourself a favor and investigate the following matters first:
- Am I allowed by law to rent out my property? – You’ll want to check not only local laws but also potential HOA regulations and even possible restrictions with your mortgage lender.
- Can I affordably live somewhere else? – You’ll want to determine how much income you will bring in each month with the rental property and how that new income will be taxed. You’ll also need to estimate the expenses of managing the rental property throughout the year. Is this extra income enough to offset the increased cost of living somewhere else? Will you be able to find a new living space with a similar commute to work, or do you need to calculate and consider changes to your transportation costs? What other extra expenses might you incur by moving to a new location?
- Do I have time to manage the rental? – Managing a rental property can be a big-time investment, especially if the property needs repairs or renovations. If you are already operating on a tight schedule, you may not have the time required to effectively manage the rental. If this is the case, you’ll need to think about the options for a third party to manage the rental for you instead.
- Do I need any permits? – Many locations require permits before you convert a property from a personal residence to a rental unit. Consult with a local real estate attorney for the most accurate information.
- What type of insurance is required on my rental property? – Insurance requirements differ for personal residences versus rental properties, so be sure to consult with your homeowner’s insurance agent to convert the policy to landlord’s insurance instead.
Prep the Property
Now that you’ve done your research, applied for permits, and have the right insurance, it’s time to prepare the property for tenants. The property needs to be clean and safe at a minimum. Consider applying a fresh coat of paint to the interior walls for a quick and easy makeover. For more dated interiors, updating the appliances, flooring, and fixtures can bring in extra rental revenue.
If there are safety issues to correct, you’ll need major restorations. These can take considerable time and expense, so be sure to calculate these costs when determining if you can afford to rent the property.
Find a Property Manager
Now that your home is prepped and ready to rent, it’s time to find a great property manager. Dealing with the day-to-day activities required to manage your rental property, including maintenance requests, rent collection, lease renewals, monthly inspections, and more, can turn this passive income stream into an active effort quickly. Using a professional, experienced property manager relieves you of these stressors and allows you to sit back and collect rent effortlessly.
Property Management in Southwest Florida
If the home you’re converting into a rental property is located in southwest Florida, trust Douglas Realty Property Management to bring the team, network, and resources required to effectively manage your rental property with minimal effort on your part. Learn the joy of a truly passive income stream by trusting Douglas with all your rental property management needs…call us at (239) 542-6906 or contact us online to get started today!