When you have an old house you want to keep but already have a new home or can’t stay in the area, a good way to handle it is to convert it into a rental property. Renting it out will allow you to generate income and keep it available to you. If in the future you want to return to it, it should be easy enough to convert it back into a personal household. Here are some tips on how you can do the rental conversion properly.
Make Sure it is Legal
Before anything else, you should check whether it is legal to convert your property into a rental. For one, your mortgage, if you have not fully paid it, may restrict your home. Home mortgages are for residential properties. Converting your home into a rental turns it into a commercial property. You may get into trouble with the bank if this happens. Another problem is the local laws. There might be zoning conflicts and homeowner’s association regulations you are violating. Look over everything with the help of an attorney to ensure that you can do it. Additionally, the lawyer will help set up any tenant contracts you plan on making.
Fix the Utilities
Depending on how you want to turn your house into a rental, there might be some changes. If you intend to let one family rent the house, then there should not be many changes. But converting it into a place that can service multiple tenants is more of a challenge. For this, you’ll need to change the utilities. Contact a commercial electrician and a plumber so that you can plan to upgrade the plumbing and the electrical system. With more people on the property, then you’ll need more powerful and larger systems to service them all.
Change Your Insurance Policy
If you have an insurance policy on your home, then you need to upgrade it. Most home insurance is only for residential properties. That will not be enough for the potential damage that your home might experience. Upgrading to landlord’s insurance is your only option. It combines homeowner’s insurance with liability insurance to cover all of your potential issues. It will pay out in case the property gets damaged and can help with liability if any of the tenants get injured on the property.
Ensure That it is Attractive to Tenants
While you might be confident that your home is a nice place, you still need to convert it to a place that would attract tenants. There are several features that they would appreciate. For example, better lights are a big favorite. You might also even consider expanding the current space. This can cost you a bit but with good budgeting, you should be able to squeeze in some fixes. It will pay off if you get a good set of tenants since their rent payments will cover it.
Iron Out Property Management
Next, you should consider how the property is going to be managed. As an absentee landlord, this can be a problem. Fortunately, you have options. First, if your new home is nearby, then you should be able to go and drop by every week or so. Give the tenants your number so that they can call you during an emergency and you should be good to go. You can also have the option of hiring a property manager. These are professionals who do the landlord job for a fee. It can cut into your revenue but it removes a lot of the worries from your plate.
Start Looking for the Right Tenants
The final part is to get tenants for your property. This sounds easy but it can be a challenge. For one, you need to advertise your property somewhere. Once you get inquiries, you don’t simply accept people to live on your property. You need to screen tenants for past bad behavior and the ability to pay the rent. This protects other tenants and your property. It also ensures that you don’t lose money on your rental property. If possible, interview the prospective tenant to see whether they are a good fit.
A property conversion can be an intimidating task. But the effort you put into it can be rewarding. A properly converted property would be able to accept a good range of tenants and generate a good stream of revenue. It will soon be able to for the changes as well as provide you with dependable income which is more than enough for most people.