Here at Bay Management Group, we work with many clients, who have decided to turn their home into a rental property, and there are many reasons for doing so. Some clients inherit a home from a family member, and selling is just not an option. While others have had their property on the market for sale for quite some time, and are unable to sell it for their asking price.
Regardless of the reason for wanting to turn your home into a rental, there are steps that everyone should take to ensure their home is, in fact ready to be a rental, and that they are financially ready to be a landlord.
In this blog post, we are going to discuss seven important factors that will help get you and your home ready for future tenants.
1. Check Your Mortgage:
Before moving on to any other step for turning your home into a rental property, the very first thing you want to do is check your mortgage. Many lenders have certain rules regarding rental properties. For starters, mortgage for primary residences, often times have better interest rates. Something else to keep in mind, is that most lenders have specific rules for using a property as a rental. Many require that the home be used as a primary residence for at least 1-2 years. Making sure that the timing is right, and your lending agreement allows you to turn your home into a rental should be your very first step.
2. Check With Your HOA:
If your home has a HOA in place, you will want to speak with a representative from the HOA, to find out what is needed from you and any future renters. Most HOAs require specific documents to be completed and signed by all renters, as well as copies of the lease agreement. You’ll also want to make sure you gather all information pertaining to the HOA, such as community rules and guidelines, so that you can provide those to your renter(s).
3. Update Your Insurance:
While you should already have Homeowners Insurance, Landlord Insurance to protect your property is a bit different and comes at a higher cost. As a landlord, you will want your rental property to be properly insured, so that you are protecting yourself and your family from any liability. When shopping for insurance, you want to think beyond the basics of coverage for property damage. With landlord insurance, you can also find coverage for things such as legal fees, if you are sued, as well as coverage for loss rent, if the property becomes damaged and inhabitable.
4. Compliance Items:
When your property is turned into a rental, there a certain licenses and certificates that you will be required to obtain, in order for your property to operate as a rental. In Baltimore City, every rental property must be inspected by a state licensed inspector on a 1-3 year basis. Once inspected, the property will receive a rental license. You will then be required to re-new that license in another 1-3 years. Baltimore City also requires each rental property to be registered with the city on a yearly basis. In Baltimore County, a rental license is also required, and should be renewed every 2 years. Harford County, on the other hand, does not currently require a rental license.
There’s also lead testing to consider as well. In the state of Maryland, if your property was built prior to 1978, you are required to have the property tested by a licensed lead inspector. Once tested, you will receive a certificate that is to be shared with Maryland Department of the Environment (MDE), as well as the tenant. There are 3 different types of lead certificates; Lead Free, Limited Lead Free, and Full Risk Reduction. You’ll want to consult with a licensed lead inspector, to discuss your options.
It’s important to check with your local county, to see what is needed for your rental property. Keep in mind, these laws are subject to change, and should be looked into on an annual basis.
5. Decide How Much You Want to Charge:
Now that you have taken care of the most important steps, the next thing to consider, is how much monthly rent you want to charge. You’ll want to take into consideration the current market value for rental properties in that specific area. Other items to consider should be your monthly mortgage payment, any HOA fees, as well as the cost for maintenance repairs. You want to choose a monthly rent amount that’s appealing to renters, while still covering your monthly expenses.
6. Make Your Property Move in Ready:
Preparing your home for new tenants is more than just a cleaning of the property. You’ll want to address any and all maintenance issues, make sure all appliances work properly, remove any and all personal belongings out of the home, clean the property thoroughly (we recommend having the property professionally cleaned), and address any yard maintenance. First impressions are everything, and the last thing you want is a tenant who is unhappy about the state of their new home.
7. Consider Hiring a Management Company:
There’s a lot that goes into having a rental property. From getting the property to a rent ready condition, to managing your tenants, being a landlord requires a good amount of time and dedication. If you’re like a lot of our clients, you already have full schedule, and need an extra set of hands. That’s where companies like Bay Management Group come in. We are a third party Property Management company that works directly with home owners.
Hiring a professional third party, that understands and is up to date on lead, compliance, and tenant/landlord laws, is just one of the perks of choosing to hire a Property Management company. We also assist with getting your property rent ready, screening prospective tenants, sending all lease documents, scheduling move ins, collecting rent, scheduling maintenance, and so much more.
Whether you choose to self-manage your new rental property, or hire a management company, following the above steps will help set you up for a positive rental property experience.
To find out more about the services Bay Management Group offers, give us a call today to discuss your management needs!