Have you found yourself in a situation where you're renting out a room or apartment long-term for a friend or family member? As it turns out, the people staying on your property have certain rights granted to them regardless of whether or not their stay is part of a lease or contract.
Even though you may be an accidental landlord, you are still responsible for the same things as an intentional landlord. However, you may not know how to manage homes for rent or anything about real estate investing.
Here are five essential tips that will help accidental landlords get started with property management.
1. Talk to Your Lender
The very first thing you should do if you find yourself as an accidental landlord is to get in touch with your lender or mortgage company. They need to know about anything that may affect the value of your property or your ability to repay them.
For example, any big renovations on the property must be run by the lender first. The same applies to a change in occupancy.
2. Get Landlord Insurance
Landlord insurance is a necessity if you want to avoid financial trouble later on. These policies protect the home or structure you're renting out in case of damages. You also get personal liability coverage that protects you from tenants claiming to have gotten injured on your property.
A Dwelling Fire policy is another option to consider to protect you from loss in the case of a fire.
3. Consider the Costs
As a landlord, you'll want to work out how much you want to rent out your property for and the operating costs that will go into it.
Overpricing your property will lead to long periods without tenants. Underpricing will fill those vacancies but may lead to financial ruin.
Using an ROI calculator can help you figure out the profit you can expect based on numerous variables.
4. Provide Safety Certificates
Landlords must make sure that the property they're renting out is in good condition and meets certain legal requirements.
Some of the various certificates they can acquire include ones for gas safety, energy performance, electrical safety, and fire safety. Many of these are legally required or necessary before you can get landlord insurance.
5. Pay Income Tax
One thing you shouldn't forget is that rent counts as a source of income. Even if you didn't intend to become a landlord, you are one now. You must pay income tax on any profit you've earned from your rental property.
Landlords must list items like total income, expenses, and depreciation for each rental property they own.
Accidental Landlords Need Help Too
If you've found yourself in the same position as other accidental landlords, then you may need to reach out to a property management company near you. The property managers assigned to you can help guide you in your role as landlord. They can even take over day-to-day duties like maintenance requests and collecting rent.
PMI Brewder Realty provides both residential and commercial property management services in the Lynnwood area. Reach out today if you need help or want a free rental analysis.
