6 Top Tips For Turning Your Home Into A Rental Property

Converting your home to a rental facility is a beneficial way to get started in the real estate industry. It's beneficial if you're moving to a new house but doesn't want to give up your older home. If you're preparing for a financially secure future and looking to build your wealth, it's also a practical approach. You may want to turn your home into apartments for rent in salt lake city ut for a variety of reasons.

Just like other real estate investments, this process can be overwhelming. It is important to consider many factors to become successful and avoid financial losses.

Here are six tips for turning your home into a rental property:

1. Do a mortgage check

Read the fine print on your mortgage or schedule a meeting with your mortgage lender before taking concrete steps toward a rental conversion. It is imperative if you are currently living there.

If you bought a home to live in as your primary residence, you must maintain that status for at least twelve months after you purchased it. It doesn't mean you can't convert it later, but you'll have to wait until the 12-month period has passed. Fraudulent mortgages are otherwise committed.

Check with your current mortgage lender if you can afford a second mortgage. If your debt-to-income ratio is off or the risk is too high, you may not be approved for a second mortgage if you own a rental property.

2. Permits are required

Residential properties operating as rentals require a permit in many municipalities if you are unsure whether you need a permit, contact city hall.

Safety is the focus of the permit. Often, an inspector from the local government will inspect the house for various safety hazards, such as electrical, heating, and adequate exits. The inspector informs you if any changes, modifications, or repairs are needed to make the property compliant. Converting a home into a rental property requires these relatively inexpensive permits.

3. Update relevant software

You are ready to prepare your home for the rental market now that you have all the paperwork. Make upgrades to your home if it is more than a few years old to rent it at a competitive rate.

Renting is different from renovating your primary residence. Consider consulting a local agent or property manager to ensure your upgrades maximize your property's value. Add amenities like dishwashers and more storage space, which are often dealbreakers.

4. Learn about the changes to the tax code

Taxes change when you convert your home to a rental. In this regard, speaking with an accountant is highly recommended. You may need to adjust your tax obligations. Renting your home to tenants will usually generate taxable income, so you should be aware of these changes. You can deduct these expenditures from your rental property:

Utilities, if you pay them

• Property taxes
• Mortgage interests
• Homeowner's association fees
• Landlord insurance
• Repairs and renovations

The guides on MTD for landlords can help you simplify and understand these changes.

5. Set a price

You're now properly protected! Now that you have rental income, you can set the price. Landlords typically respond with "more." What is the right number?

Market research. Find out your area's rental rates for free with these resources. Compare rates on Zillow, Trulia, and Rent.com for similar properties.

Consider your costs. Provide yourself with some profit above the costs of running the property. This profit number is likely to be small (around $150 in most cases) if you have a mortgage, but when you pay off the mortgage, that profit will jump.

Hire a real estate agent. Real estate agents can give you a good idea of what a property should rent for. Knowing what you don't know and asking for help is the number one rule of investing. An agent can show you comparable properties, give you a range of rental rates you can expect, and even help you find a tenant faster.

The general rules. The rent a landlord can charge is typically 0.8%-1.0% of the home's value. You should be able to charge $2,000 - $2,500 per month for a $250,000 home. However, you need to compare the property to others in the market, depending on where you live.

6. Tenant search

The next step is to find tenants once you've set your rent. To avoid problems with your property, you should conduct a thorough screening process. Do not hesitate to check a tenant's background when considering them as a tenant. Then, you won't have to worry about your tenants becoming a headache.

Conclusion

Making passive income and achieving financial success can be achieved through rental properties. It can be intimidating to become a landlord, however. There are several things to take care of, so you may need help figuring out where and how to begin.

Following these tips, you can easily turn your home into a rental property. It will be easier for you to transition from resident to landlord if you consider these factors.