If you own a great home or condo in an in-demand location, you may be pondering the idea of turning it into a long-term rental property. By keeping your home as a rental instead of selling it to a new owner, you’ll diversify your portfolio and build equity over the years — all while having your renters pay the monthly mortgage.
Before converting your house into a rental, however, you’ll need to ensure that your home will thrive as an income property. According to Mashvisor, good rental properties feature desirable household amenities (like updated kitchens, multiple bathrooms, and outdoor space) — and they create positive monthly cash flow. Plus, the location is key.
Once you’ve decided that you’re ready to turn your house into a rental property, these tips from the home staging experts at OnStage will help you to do it as successfully and profitably as possible!
Check With Your Mortgage Lender and HOA
If you’re ready to turn your house into a rental property, you’ll first need to ensure that you’re legally allowed to do so. Depending on your mortgage lender, renting out your home may be prohibited — or you may need to reside in the home for a designated period of time before you’re able to rent it out. And if you live under a homeowners association (HOA), you’ll need to review and comply with your HOA laws and restrictions as well.
Form an LLC
To protect yourself from personal liability in the event that you’re sued by a tenant — and to avoid double taxation as a landlord — you may wish to form a limited liability company (LLC) for your new rental business. And while it can be helpful to meet with a real estate attorney when forming an LLC and creating a rental lease agreement for the first time, you’ll save some money if you use an online formation service or file the required paperwork on your own. But since the filing process varies by state, you’ll need to review your local LLC rules before getting started.
Hire a Property Manager
If you’ll be moving out of the area, don’t have the time to take on the role of a landlord, or simply don’t know a whole lot about managing an investment property, you’ll want to hire a local property management company to manage and maintain the home on your behalf. However, property managers aren’t right for everyone, and you’ll need to make sure you can afford to hire one.
Explore Professional Staging Services
To entice potential tenants and showcase your home’s best features, it’s also important to invest in professional staging services. Staging companies such as OnStage, for instance, offer four types of home staging services: Vacant home staging; occupied home staging; redesign home staging; and furniture procurement.
Vacant staging services can be used if you’ll be removing your belongings and vacating the home before listing the property, while occupied home staging complements your existing furniture and decor. Plus, financing options are available if you need them.
Consider the Current State of the Housing Market
If you’re thinking of converting your home into a rental property amidst COVID-19, there are a few other things you’ll need to consider. According to Clever Real Estate, the decision to sell or rent out your home during the coronavirus crisis will typically depend on:
- Current real estate trends and predictions.
- Your local real estate market.
- The average cost of rent in your area.
- Your home’s current worth vs. much you paid for it.
- Whether you can afford to keep the home during COVID-19 and buy or rent a new place to live.
The Bottom Line
The decision to sell or rent out your home isn’t always clear, especially in the era of COVID-19. However, whether to turn your home into a rental property will depend on your specific situation — such as your home’s current value, local real estate market, and whether you’re up for the task of managing a rental property. Before reaching a decision, be sure to research your local housing market and weigh the pros and cons of renting your home vs. selling it.
Are you looking for professional staging services to beautify your rental property? Contact the OnStage team today to learn all about their professional staging services and home staging financing options. 888-503-2177