Converting Your Home into a Rental Property
When you move, you have to decide what to do with your old property. For most homeowners, the simple answer is to sell it and use that money as a down payment on your new house. But what if you don’t want to, or are unable to do this? Thankfully, you have other options.
Instead of listing your home for sale, why not try renting it instead? With a little planning, you can turn your old home into an investment.
Why Would Someone Rent a Home?
When people think of apartments, they usually picture a snug studio or loft, but what if someone’s looking for something bigger? Families might want a place for their children to grow, or a busy executive might be looking for a quiet place to call his own. Apartment’s come in all shapes and sizes, including ones that look a lot like your current home.
In fact, homes have several advantages over most apartments that might make your property more attractive. Some of these include:
Most apartments, especially if it’s in a larger town or city, force tenants to park on the street, often without reserved spaces. In poor weather, or in crowded neighborhoods, having a spot near your door- or inside a garage is a huge convenience for potential renters. Why would they want to deal with that when they could rent a home with a private parking lot, or even a garage?
For the typical apartment, every square foot counts. This means that most units don’t have a lot of extra room left over for closets or nooks to stick in an extra chest or set of drawers. This added room gives potential tenants the chance to make your place feel more like their own, which could make it more attractive to older renters who have items they collected over the years.
Saving quarters and making a weekly trip to a laundry mat is something that few who rent enjoy, but most apartments don’t have the space for a washer or dryer, or the hookups that allow them to be installed. However, these hookups are standard in most homes.
Two other appliances that homeowners might take for granted but renters can find invaluable are a garbage disposal and a dishwasher. If you already have these items in your home, you can use them as a hook to get the attention for potential tenants.
reported that the Census Bureau recently said that home ownership rates are the lowest they’ve been in more than 50 years. However, this doesn’t mean that everyone who rents dreams of a small studio apartment. Your home could be exactly the kind of rental they’re looking for.
Making Your Home Rental Ready
Renting out a home requires more than placing a “for rent” sign in your front yard. To get the most out of your property, you’ll want to take some time, and potentially some cash, to make sure you can get the best rent, and tenants, possible.
Reduce Everyday Maintenance
Every home has quirks that long-time homeowners learn to live with, often unconsciously. These little maintenance issues, such as a door occasionally getting stuck in its frame, might not be a big deal to you, but they could be a potential deal breaker to someone looking to rent your home.
When you have someone sign a lease, you’re asking them to accept the home as is. If a door sticks, they can’t fix it on their own, they have to request that you do it. If a faucet leaks, they can’t head to a Home Depot for a replacement, you have to. Repairing these minor annoyances now can help reduce the number of maintenance calls you’ll have to make, and a home in good repair is more attractive to potential tenants.
Fewer issues for your tenants can also mean fewer headaches for you since they won’t have to call you as often to fix something that goes wrong. Doing something as simple as replacing all your lightbulbs with high-efficiency LED’s can dramatically reduce the number of service calls you need to make. Now that’s what you could call a bright idea!
Consider Hiring a Cleaning Service
One way to prepare your home for renters is to hire a professional service to deep clean every part of your home, including steam cleaning your carpets. If you own pets, a deep cleaning will open up your rental to tenants who might have pet allergies.
But what if you’re still living in your home while you’re trying to rent it out? If so, let potential tenants know that you’ll pay for a deep clean before they move in. These professional services aren’t cheap, but they’ll make it easier to sell your place.
Invest in Renovations
If you’re going to rent out your home, investing cash in some simple renovations can make your listing more attractive to potential tenants and allow you to charge a premium for rent. If someone signs a lease, they’re accepting the property as-is, so why not make it something amazing?
Even something as simple as a fresh coat of paint can change how your home feels to someone looking to rent, and it’s relatively inexpensive to do. If you plan on renting long-term, or if your home is in need of a little TLC, it might be time to consider larger renovations.
Modernizing the kitchen, finishing the basement, or even just sprucing up the master bedroom can make the difference between tenants thinking of your home as “just a place to crash” and “somewhere I could see myself living.”
These types of renovations can be costly, but if you want to turn your old home into a long-term investment, they can also be worth it. One way to pay for your improvements is by using the equity you already have in your home, known as a cash out refinance loan.
Also known as a cash-out refi, this mortgage will refinance your current mortgage and offer you a portion of the equity, of value, that you own in the home as cash that you can spend on home improvements. If this is something you’d like to learn more about, contact us today to learn about how J.G. Wentworth Home Lending can help you get the money you need to build the best rental property.
This blog post is intended for informational purposes only. J.G. Wentworth does not provide financial, legal, or tax advice. Please contact an appropriate advisor for such services.
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