There are many reasons you may have decided to convert your home into a rental property and become a landlord. Maybe you bought a new house but can’t seem to sell the old one for a fair price. Maybe you want to generate a passive rental income from the monthly rent. Whatever the reason, it can be hard to know where to start or what changes need to be made in order to make owning rental property become a reality.

Here are a few steps you can take to start making this change a reality.

Check Your Mortgage

If you have a mortgage on your home and haven’t lived there for at least a year, it’s possible you’ll need to wait before renting your home. This is because there are certain benefits to taking out a loan for a primary residence versus a vacation home or investment property such as lower interest rates and smaller down payments.

If you make the change sooner than 12 months, you, the landlord could be committing mortgage fraud resulting in foreclosure. To prevent this, check your loan paperwork or talk to your lender to find out the exact rules in making this switch.

Look Into Property Insurance

Simply having a homeowner’s insurance policy won’t be adequate for your new rental property. Having tenants renting your property means you’re partially liable for their safety. For example, if a tree were to fall on the home and your tenants got hurt, the landlords would have to pay for their injuries. Or, if they were to slip and fall outside the property and blame it on the landlords negligence and turn things into a legal headache, you would have no financial help with regular homeowners insurance.

Tax Changes

Any rent income you make on your new rental property will have to be taxed at the end of the year. However, there are many potential deductibles and tax benefits you can claim that can save you money. For example, utilities, homeowners association fees, landlord insurance policies, repairs to the house, property taxes, and mortgage interest can all be considered deductibles on your taxes. Consider speaking to a tax advisor about these and see if there are any steps needed to convert your home to a rental property from their point of view.

Repairs and Upgrades

Look at other rental properties in the area to make sure your house lives up to the competition. If they have more updated appliances or better amenities, it might be in your best interest to make some changes. Property maintenance and repairs can also be necessary, A new coat of paint, for instance, can make a big difference in making a property look new. Curb appeal also makes a big first impression, so investing in some landscaping could be a smart decision.

Find a Tenant

Now that you’ve prepared your property, it’s time to start looking for tenants! List your property on sites such as Zillow, Craigslist, or your city’s Facebook page, and get ready to start combing through applications. Look for automatic disqualifiers in prospective tenants such as a gross monthly income lower than three times the amount of rent or no steady job of at least a year. No matter how nice the potential tenant may seem when you first meet them, always be sure to run a professional background and credit check. Be patient, as taking the time to find a good tenant will save you a lot of time and money in the long run.

Bottom Line

There are many steps involved in converting your home into a rental property and becoming a landlord. If you would like help managing your rentals, contact a professional property manager like Keyrenter Richmond today.