How to Turn Your Home Into a Long-Term Rental Property Instead of Selling During the Pandemic
Written by Jackie Waters of http://hyper-tidy.com/
Most of us never expected just how widespread the COVID-19 pandemic would become, and we never anticipated how much it would change our lives. Even as some communities start to reopen, most of us are still getting used to a new normal – along with the uncertainty of these times. Uncertainty can be a scary thing, especially when it comes to buying or selling a home. That’s one reason why some people are choosing to convert their homes into long-term rental properties rather than selling.
If this sounds like it may be right for your situation, take a look at these top considerations for how to convert your property successfully.
Financial and Legal Issues to Consider
Is now a good time to sell?
It’s understandable that you may be concerned about selling your home during a pandemic. The truth is that there isn’t a “right” or “wrong” answer to whether you should sell now. However, what you can do is find information that will help you decide. Look into current trends in your local real estate market, such as average home prices and the length of time homes typically stay on the market, to get a better idea of what you could expect if you sold now. For example, Timonium is still a somewhat competitive market, with home prices averaging $365K over the last month.
Are you ready to buy a new home?
If you’ve found a new home and you’re planning to move, you’ll want to look at the full picture of how buying a second home will impact you financially. Start by researching the average rent you can expect to earn in your area so you can be sure to get a good return on your investment. You’ll also want to shop around for the right loan on your second home. Unless you have unique circumstances, you’ll likely want a conventional loan. Conventional loans give you a lot of flexibility in terms of how much you can put down and the type of interest rates and terms available, whether fixed or adjustable.
Have you researched landlord laws, insurance, and tax implications? Another essential consideration is to make sure you’re familiar with landlord laws, as well as whether local zoning restrictions apply. Another thing to keep in mind is that most homeowners insurance policies don’t cover rentals, so you’ll need to get rental property insurance. Last but not least, make sure you’re familiar with how rental income is taxed, along with deductions you’ll be able to take.
Getting Your Home Rental-Ready
Renting out your home isn’t as simple as moving your stuff out and advertising that it’s available. In many ways, this step is similar to getting your home ready to sell. You’ll need to take care of any maintenance so that you can be sure the home is in good condition and safe for your tenants. The website LawDepot has a useful checklist, which includes checking the condition of appliances, smoke detectors, and doing general repairs. In addition to these necessities, it’s worth the investment to make upgrades that tenants want most in a property too, including security features, lots of storage space, and providing a washer and dryer.
Managing Your Rental
Once your home is ready to rent, the next step is to find renters and maintain the property. Keep in mind that having a desirable home is only part of what it takes to get tenants. Attracting good tenants also comes from how you market it. There are simple steps you can take, such as using high quality photos in any rental listings, that will make your home stand out. Perhaps the biggest question to answer is if you want to do the marketing and other management tasks yourself, or whether you’d be better off hiring a property management company.
Either way, the good thing is that you already know your neighborhood. This is an advantage because you can market your home to the type of person who will be looking to rent there. Transitioning from homeowner to landlord takes some work, but if you decide it’s the right fit for your situation, the payoff can be well worth the effort.