Deciding to rent out your Birmingham property is a wise financial decision. Not only will you collect monthly rental income, you’ll watch your property grow in value. Tenants are essentially paying down your mortgage and contributing to expenses like taxes, insurance, and maintenance while they live there. If your home is paid off – even better! You’re earning straight cash flow and holding onto a valuable and appreciating asset.
We know renting out a home can be confusing and challenging, especially if you’ve never done it before. Here are some of the things you need to do first.
Prepare it for the Rental Market
First, you’ll want to stop thinking about it as your own home and start thinking about it as a small business. This means removing any trace of your own self and personality from the property. Paint the walls a neutral color, have the carpets professionally cleaned or upgrade to a hard surface flooring that’s easier to maintain.
Take out all of your personal property. You might think you’re doing your tenants a favor by leaving behind a toaster oven or a set of silverware. However, long-term tenants will want to move their own furniture and appliances into the home. You should leave appliances and nothing more.
Make sure everything is functioning and clean. Perhaps that wobbly step never really bothered you while you were living in the home, but tenants are going to notice it and possibly trip on it, which is a liability risk. Check all the faucets and the doors and windows to make sure they lock. Everything has to be working before you rent the home out.
Switch Your Property Insurance
Before you rent out your home, you’ll have to change your insurance policy. Most owner/occupants have a homeowner’s insurance policy, which covers the structure of the home as well as the contents. With a landlord policy, your structure is still covered and you also get extra coverage for liability. However, the contents of your tenants will not be covered under a landlord policy. It’s a good idea to require that they have renter’s insurance. This is for their protection and yours.
Budget for Maintenance and Vacancy
Some experts will recommend you have three months of expenses for the home in savings in case it doesn’t rent quickly. You’ll want to be able to cover your mortgage, utilities, and other expenses if you don’t have a tenant in place. It’s also important to budget for maintenance. Things are going to break when you have a tenant living there, and you’ll need to have cash on hand to pay for these minor and major repairs. Consider a maintenance reserve where you’ll save a percentage of the rent you collect each month. That will provide peace of mind when something does go wrong.
Consider Professional Birmingham Property Management
Finding a tenant, executing a lease agreement, gathering a list of preferred vendors and contractors to take care of maintenance, and protecting yourself from expensive legal mistakes can often be a full-time job. You’re probably not renting out your home in order to work more. You’re renting it out in order to let your asset grow in value and collect some rent.
A professional Birmingham property manager has the systems in place and the experience to effectively lease, manage, and maintain your home. Don’t waste time making all the mistakes we’ve already made. You can access our expertise and our tools and resources, making this a better experience for you and your tenants.
We’d love to tell you more. Please contact us at Decas Group.