6 Tips for Home Owners Who Turn Into Landlords
Home owners who decide to rent out their properties have to stop thinking of themselves as home owners and instead consider themselves as running a small business, experts say.
Thinking like a businessperson means focusing on the monthly cost of maintenance, mortgage and taxes, as well as being aware of landlord-tenant regulations and avoiding liabilities.
Here are key issues to consider:
- Set a fair rent. Setting the right price will make it more likely that a landlord will be able to keep the place rented.
- Understand landlord-tenant rules. Running afoul of landlord-tenant regulations and rules regarding security deposits can be costly.
- Screen applicants. Eliminating potential tenants who can’t pay or who won’t take care of the property is very important.
- Lay out the rules in a lease. Widely available sample leases can help. If you have questions, ask an attorney.
- Consider a property manager. Despite the expense, turning the job over to experts can help a landlord come out ahead. These are not typical Realtors, but specialists.
- Talk to the condo association. If the property is a condominium, be prepared to deal with a host of regulations.
- Be aware of and observe State of CT regulations. Fair Housing laws must be observed. Please refer to http://www.ct.gov/opapd/cwp/view.asp?a=1756&q=277248 for details. Security deposits must be kept separate from other funds and landlords are required to pay interest on these funds to the tenant. The required current rate of interest is 1.5% per year.
- Don’t understand the tax implications. Selling a rental property has different taxes than selling a primary residence. Consult with your accountant.
If you have any questions, please don’t hesitate to email me at Kaye@KayeLewis.com.