If you’re considering purchasing a new home, you’ve probably thought about selling your current residence or possibly renting it out, which would provide some passive income for you. Of course, this option would only be feasible if you are willing to handle the daily responsibilities that come with being a landlord. So before you turn your house into an investment property, here are a few things you’ll need to take care of to increase your chances of success.
Research the Local Market
Before you put your investment property on the market, it’s best to know what similar houses are going for in your area. Websites like Zillow will let you know how to price your rental property, so you can compete with the other homes in your area.
Get A Rental Dwelling Policy” (RDP)
Once you’ve decided to turn your home into a rental property, you’ll need insurance. The most popular type of insurance for rentals is a rental dwelling policy or an RDP. This type of policy will protect you against liability. Shop around with different insurance providers to ensure you get the best rate. You may want to start with your current insurance provider.
After you’ve looked into insurance and researched the rental market in your city, it’s time to determine if you can afford to be a landlord. Remember that being a landlord, you’ll be managing at least two properties (the home you’re converting into a rental property and your new home). That means you’ll need to have money set aside for unexpected repairs for two homes. You’ll also have to pay for the maintenance for the investment property, such as windows, roof damage, furnace, AC unit, etc., since this is not the tenant’s responsibility. It’s also important to keep in mind that your investment property could be vacant for a few months in between tenants, which means you’ll be responsible for the mortgage payments. Setting up an account specifically for your rental property would be a good idea before becoming a landlord.
Consider Hiring a Property Management Company
Keeping an investment property looking its best can be time-consuming when you have other responsibilities. You may not have enough time to manage your rental property. This where a property management company can help. A property management company can help you find great tenants, collect rent payments, and manage the property. This can make the title of ‘landlord’ a lot easier for you to live up to.
These are just a few of the basic things you’ll need to take care of before you decide to manage an investment property. After your first rental property goes well, you may find that you’ll want to get a few more properties under your belt and turn your investment properties into a more lucrative venture.