There are many reasons which can make someone decide to change their property from a home to a rental property. These may include an acquisition of another property, maybe through inheritance; a case of relocation or as a way of supplementing the current income. Regardless of the reason, there are different steps to be undertaken when making this changeover, which if followed would ensure compliance with the rule of law, and also ensure a smooth management of the property.
The first actual step towards achieving this is making the decision. This should involve reasonable calculations, and all possible factors as availability of the tenants should be considered first.
These steps are as listed below, and they need not follow the same procedure:
Decide on the insurance
Homeowners are required to have an insurance cover by law. The same law stipulates a special kind of insurance cover for property owners, which seeks to protect both the landlord and the tenant. This insurance helps out in case there are accidental occurrences such as fires which affect the tenants. The insurance company covers the costs and compensation, giving the landlord peace of mind.
This requirement is different to different landlords and is dependent on the jurisdiction. Permits in most cases involve payment of rates to the government of the day and place. The permit also includes compliance with various governing bodies that regulate standards, such as fire control compliance, health compliance for residential places, and many more. To get a permit, the prospective tenant has to put such measures as firefighting equipment in the residential area.
Repairs and upgrades
For a piece of property to get tenants, it must be in mint condition. In a home setup, it’s normal to have a broken window or creaking loose floorboards. For a rental property, there is need to seal all loopholes. This includes ensuring that any breakages are repaired, and a general painting overhaul is undertaken. The objective of this step is to make the home look as new as possible for the prospective tenant.
What will be the charges?
Another important step to undertake is determining the rental income per unit. The cost factor is the sole determinant of whether the tenants will be willing to pay that amount for the said property.
Some of the factors to consider in deciding on the cost per unit areas below.
- The location of the property. Properties in high-end areas draw high rental amounts whereas those in lowly areas are not as expensive
- Whether there is any existing mortgage. A house with a mortgage is charged higher to cover the mortgage payments, while one with no mortgage would be considered cheap.
- The reigning rental charges in neighboring estates. This ensures that your rate is not very low or very high as compared to those in the same area.
In property management, one can decide to manage the property on their own, or they can hire a property management company to manage the property. Each option has its pros and cons. Self-management has the advantage of not paying people to manage the property while getting a management company transfers the stress of running the home to a professional, who will, in turn, maximize the incomes. These companies help for rent collection and also ensuring cleanliness and repairs on the property.
Set the rules
A rental home’s success depends solely on the rules set to govern the tenants. This involves deciding what you wish to allow or disallow to be on the property, such as pets, and also setting an occupancy limit of the number of people you allow to occupy a single unit. Other rules involve processes such as garbage removal, cleanliness of the wash areas, a right of entry, especially at night. These rules should be written down and handed to prospective tenants.
Finding a tenant
The final step is finding a tenant for the property. This is best done using an agency, but one should make sure to specify the desired kind of tenant, for example, singles or couples. This is the part the tenant specifies whether they prefer families with or without kids.
These steps if followed should make converting a home to a rental property quite seamless.
This article was written by Ellie from maltasothebysrealty.com