You’re moving, but instead of selling your house and putting that equity towards a new house, you’re considering turning a property into a rental. This is a particularly good idea when the housing market is down, and you might actually lose money by trying to sell your previous home. You’ll have another source of income, but there are a few things you will need to consider when making the transformation.
A mortgage for your primary residence typically has a lower interest rate than a mortgage for a rental property. If you are planning on turning your property into a rental property, it is still possible to keep this benefit. Most primary residence mortgages have a specific amount of time that you have agreed to keep that house as your primary residence (usually one or two years). If you attempt to turn your property into a rental before this time is up, you can be accused of mortgage fraud, so be certain that you understand the terms of the mortgage.
You will have to switch from home insurance to rental insurance. Call your insurance company to find out the best options for your property and to make sure that you’re covered when you have tenants in your rental property.
You must provide heat, hot and cold running water, electricity, and a method for disposing of trash. Anything above and beyond these basic necessities is considered an amenity. Certain amenities, such as a fridge and oven, will make the property more attractive to tenants, but others might actually cost you more than they’re worth. When you’re turning a property into a rental, try to avoid leaving amenities that will be expensive to maintain or might present potential hazards to renters. For example, you should remove any trampolines or swing sets from the property before you allow any tenants to move in. These are items that can create possible liability problems for you. Pools should be avoided, as well, as they are both expensive to maintain and potentially hazardous. If you already have an in-ground pool on your property, covering it or locking it up is usually a good decision.
Whether this is your first rental property or one that you’re adding to your repertoire of other rentals, you should consider hiring a property management company. For first time investors, a property management company can help you learn how to decide on rental terms and how to minimize maintenance costs for your rental property. For seasoned investors, a property management company can help handle tenant screenings, advertising, and reducing potential evictions. For more information on how to maximize your profits, contact us at Keyrenter in Salt Lake today.