How to Turn Your Property into a Thriving Rental Business
Many homeowners wonder if and when they move, should they retain their original home and turn it into a rental property? There are those with additional dwelling units, garage apartments, sheds, basement apartments, and many other locations where a renter would happily pay for a roof over their head.
Review these pointers to learn how to turn your property into a thriving rental business.
Assess Your Property’s Potential and Market Demand
Do you have the potential attract and retain renters? This is the first and most important part of the process. If your property value is low, your location is less than ideal, or the space itself is difficult to access, you may have a difficult time renting when a large apartment complex or attractive home sits nearby. A resolution to this could be the presence of a property management company.
Moreover, you must consider what you can get every month for the unit and if that number is worth it to you or your family. Renting is a great idea and a simple way to generate passive income, but if that income is lower than required, there’s no point in renting to potential tenants.
Once you know that you can rent for a good price and you are in a location (with an accessible unit) that renters want, you may begin building your rental business.
Ensure the Property Meets Legal and Safety Requirements
When you start renting, the local township will want you to register and license the space. These municipalities often require inspections of the space once per year, and there are likely requirements like adding a fire extinguisher in the kitchen, maintaining the smoke detectors, providing heat and AC, etc.
If you do not meet these requirements, invest the time and money to appease the township. This process can be difficult and time-consuming, which is why you may need to consider hiring a property management company. Remember, it is essentially illegal to not be in compliance with these regulations.
Consider Hiring a Property Management Company
Working with a property management company makes it easier for you to collect rent on the property without managing the tenants, their leases, and the legalities that come with property management. Remember, there are fair housing rules set forth by the federal government, local statutes, and state laws by which you must abide. Who has time to study these rules and get it right?
Allowing the property management company to handle everything on the backend, including soliciting vendors, repairmen, etc makes your life easier for a nominal management fee.
Develop a Clear Rental Agreement and Maintain Good Communication
As you manage a rental business, remember that your rental agreement must be ironclad, reviewed by a legal professional, and should spell out every expectation you wish to set from handling repairs, to late fees, where to park, and much more.
In short, if it’s not in the lease, tenants will step over the line and you will have no legal recourse.
Create an Effective Marketing Strategy
Finally, managing a rental property requires aggressive marketing. You can work with a property manager who handles the marketing, or you may choose to post on real estate websites, in local pages on social media, or even on Craiglist. Putting a sign in front of the property saying “For Rent” is never enough. In fact, your marketing strategy should ne never-ending because you need prospects and a steady stream of tour requests because you will need to re-rent the properly at some point.
You Have the Power to Produce Passive Income Through a Rental Property
Everyone has the power to start a rental business utilizing properties they own or acquire. Generating passive income is a wonderful option for any family, but remember that assessing your property’s potential, hiring a property management company, marketing well, and setting up proper expectations are all important before taking the plunge.
