If you’re contemplating turning your house into a rental property, there are several steps you need to follow. Homeowners explore turning their primary residence into a rental property for several reasons. Some of the main reasons why include:
- Monthly rental income
- Moving from the property
- Downsizing to help maintain mortgage payments
One of the first considerations you should make is to check if your house has the specifications to be considered a rental property.
Your primary residence is your home. It’s defined as the house, condo or townhome that you spend the majority of your year in. Some specifications of a primary residence include:
- Your legal address that’s shown on tax returns, driver’s license and voter registration card
- Where you spend most of your time
- Home that’s nearest to where you bank, work and do daily activities
A rental property is defined as a residence that’s purchased by an investor and it is primarily inhabited by tenants who pay rent to the investor. Some characteristics of a rental property include:
- Can be house, condo or multi-unit property
- Does not have to be where you spend most of your time
- Property that is planned to generate income for the investor
How to List a Property for Rent
There are several steps you need to take to list your home for rent:
- Check if you have an occupancy clause: Many banks place occupancy clauses on houses they finance. This means that the homeowner cannot use the property for rental purposes. Make sure to double check with your bank, so you don’t violate any occupancy clauses
- Update insurance: Make sure to update your insurance to include any rental-required insurance. This will cover basic damages like structural damage and more.
- Choose a listing platform: Select one of the main rental listing platforms like Zillow, Realtor.com, Apartment.com, etc.
- Make a detailed listing of the property: Create a listing for your property and make sure to include a catchy title, sufficient descriptions and set a price for the monthly rental amount.
Items or Amenities to Include in the Rental Property
Turning your home into a rental property isn’t as simple as just listing your property. You need to make sure your new tenant has all the amenities they need to live comfortably. Some of the main amenities you need to include are:
- Washer/dryer
- Air conditioner
- Wifi
- Furniture
- Parking space
- TV
Administrative Considerations
There are a few other administrative considerations you should keep in mind. They include:
Taxes: You need to be mindful of how turning your property into a rental income will affect your taxes. Taking 30 minutes to sit down with your CPA will give you a good idea of how to claim taxes on your new rental property.
Zoning/HOA: You need to also make sure there are no zoning or HOA violations that occur when you turn your home into a rental property. If you are planning on adding additional units or making any major structural changes, make sure you check with your local zoning offices in your city to get approval.
