How to Convert Your Home into a Rental Property
Turning your home into a rental unit could be a great way to make extra money as a homeowner. However, converting your home can also be overwhelming, especially if you have no prior experience as a landlord. It's essential to approach this procedure wisely and strategically.
There are several things to think about, such as regulations, permits, renovations, and insurance. This article will walk you through the process of renting out your home and provide helpful advice to make the business a success.
Tips for Converting Your Property to a Rental
Consider the following tips to help achieve success when converting your home into a rental property:
Check Your Mortgage Options
If you have a mortgage on your home, you should speak with your lender to find out if you can turn your house into a rental. Some lenders could insist that you refinance or change to a new kind of mortgage, while others would let you keep your current one.
Understanding your mortgage's conditions and the potential repercussions of renting out your house is essential. If you cannot obtain a mortgage that allows you to rent out your property, consider other financing options, such as a personal loan or a line of credit.
Get the Required Permits
Your local government will need to issue the required permits before you can begin renting out your house. The criteria for rental licenses differ by province and municipality, therefore, it's crucial to learn about the particular requirements in your area in Saskatchewan. Depending on where you live, you might require permits for things like fire safety, construction codes, zoning laws, and more.
You must also ensure that your property complies with all applicable health and safety requirements. Failing to secure the required permits may result in fines, legal problems, and possibly the termination of your rental agreements. So, before renting out your house, you must ensure that the necessary permissions are in place.
Conduct Repairs and Upgrades
You must ensure that your house is in good shape and that all required renovations and repairs have been done before renting it out. This could involve maintaining the property's code compliance and taking care of issues like repairing leaky faucets and replacing broken appliances.
Aesthetic improvements like new flooring or paint can also entice prospective tenants. Prioritize the upgrades required for tenants' health and safety when performing repairs and renovations. You should also set a budget and timeline to ensure you don't overspend or delay the rental process.
Get a New Insurance Coverage
You must adjust your insurance policy to reflect the change in use when you turn your home into a rental property. This may entail obtaining additional landlord liability insurance, which safeguards you in the event of property damage or injury to renters or visitors. You must also ensure your property is protected against potential risks like fires or floods.
To get the best policy for your needs, it's important to research, compare prices, and examine several possibilities for coverage. Moreover, you should speak with an insurance broker who can assist you in finding the best coverage for your rental property.
Know the Law
You are responsible as a landlord to abide by all relevant provincial or territorial laws. These are laws governing landlord-tenant relationships, building codes, rules relating to health and safety, and more. Also, you must be aware of both your rights and obligations as a landlord and those of your tenants.
To ensure you comply with all laws, it's a good idea to speak with a lawyer specializing in real estate and rental law. Consider joining a landlord association or seeking out the help of a professional property manager to stay up-to-date on any changes in the law.
Learn About Tax Changes
When you rent your property, you'll need to report your rental income on your tax return. It's essential to know the taxation of rental income and ensure that you're using all permitted tax credits and deductions.
Depending on your specific circumstances, you might also have to pay capital gains taxes when you eventually sell your rental property. It's wise to speak with a tax expert who can explain the tax implications of owning a rental property. They can also assist you in creating a tax plan that reduces your liability.
Decide if You Want to Hire a Property Manager
As a landlord, you can either manage your rental property yourself or have it managed by a property management company. Hiring a property manager can be advantageous if you don't have the time, expertise, or ability to handle your rental property yourself.
Rent collection, tenant screening, upkeep, and repairs are just a few of the things that property managers can take care of on your behalf. It's crucial to evaluate costs and compare services before hiring a property manager. You should also ask for references and read reviews to ensure that you hire a reputable and reliable company.
Learn How to Be a Landlord
Before you start renting out your property, it's crucial to comprehend the responsibilities that come with being a landlord. You'll need to develop your communication skills as well as your ability to resolve issues and enforce rules. What’s more, you'll need to develop sound money management skills and maintain thorough records of your rental revenue and spending.
Conclusion
Converting your home into a rental property can be a great way to generate passive income. By following the tips outlined in this article you’re more likely to successfully transition your property into a rental. With the right preparation, knowledge, and support, you can become a successful landlord and enjoy the benefits of rental property ownership.
Contact Leenan Property Management today to learn more about how we can help you manage your rental property. Our team of experienced property managers can handle all aspects of managing your rental property, from tenant screening to rent collection to maintenance and repairs!
