If you’re moving to a new house, you should consider renting your old one to a tenant. Such a move can be financially advantageous, and in multiple ways. Before you can take on a tenant, you’ll need to prepare the home for a renter – but the process is easier than you might think.
The Advantages of Renting Your Home
If you can afford to pay for your new home without selling the old one, renting your old home can improve your financial status significantly.
Let’s assume you’re still paying off the mortgage of the old home at a rate of $1,200 per month. You’ll have to incur other regular expenses, such as maintenance and repairs as needed, at a rate of about $300 per month, totaling $1,500 per month in total expenses, on average. If you can charge $1,800 per month in rent, you’ll stand to make a profit of $300 per month, or $3,600 per year, assuming the property stays occupied – all without requiring much time or effort on your part.
The benefits get even better if you decide to hold the property long-term. Properties in good neighborhoods and in good condition tend to appreciate in value over time, seeing annual gains of somewhere between 4 percent and 15 percent. If you hold the property for a couple of extra decades, your initial investment could pay off many times over.
The question is, how do you prepare your old home for rent?
Talk to a Lawyer
First, you’ll want to talk to a lawyer about the laws in your area. Some state and local laws dictate the features your property can and can’t include for renters. Generally speaking, you’ll need to keep the property in reasonable living condition – meaning no major threats to your tenants’ life, health, or wellbeing.
This much should be obvious. But you may also need to make changes like adding fire escapes or upgrading antiquated features; the only way to be sure you’re in full compliance is to work with a legal expert.
Clean Out the House and Make Renovations
Next, you’ll be ready to clean out the house and make renovations as necessary. While some rented homes come fully furnished, it’s more common for tenants to provide their own furniture. Accordingly, you’ll need to make space by moving all your things out.
A handful of modern renovations can boost the appeal of your property, attracting more tenants and allowing you to charge more. To do this:
· Run the numbers. Some renovation projects are more valuable than others. Before committing to any renovation, make sure to crunch the numbers. Figure out how much you’re going to pay for the renovation (including materials and labor costs), calculate how much additional rent you’ll be able to make because of the renovation, and figure out how long it will take for you to break even. If it’s going to take longer than 10 years, it’s probably not worth making.
· Rent a dumpster. If you’re going to do the renovation yourself, make sure you rent a dumpster. It’s going to make cleanup much easier and more convenient – and ensure you’re disposing of your old materials properly. Just review the rules for dumpster rental and realize that not everything can be legally discarded in a dumpster.
· Prioritize kitchens and bathrooms. Kitchens and bathrooms can set the tone for the entire living space, so they should be your priorities. You want these rooms to “pop” when people see them.
Improve the Curb Appeal
Next, invest in the curb appeal of your home – in other words, its attractiveness when seen from the outside. The better your curb appeal, the better your tenants’ first impressions will be. Upgrade or clean the siding, invest in better landscaping to produce a more welcoming environment, and keep the exterior as clean as possible.
Do a Deep Clean
Speaking of cleanliness, do a deep clean of your entire home, even if you have to pay a professional to do it. Shampooing the carpets, washing the windows, and hitting all the hidden nooks and crannies will make the property seem much more inviting and appealing to your tenant applicants.
Take Photos and Get Ready to Market
At this stage, you’ll be ready to prepare for marketing your property. Hire a professional photographer and have photos taken throughout your house, making use of natural lighting and using clever angles to show off its best features. Then write up a listing that highlights the benefits of living here and start marketing!
Being a landlord can be both stressful and demanding, but if you have the right attitude and you’re willing to adapt, you can make it work. These initial steps should put you in a much better position to succeed long-term.
