Going From Homeowner To Real Estate Investor
Many homes we manage were previously occupied by the owners. Maybe you lived there five years or perhaps twenty. Maybe it’s where you raised your children that are now grown and have moved out. The house may have been the backdrop for a lot of memories but once you move and turn it into a rental, it’s no longer your home.
Moving out of your home is stressful enough but add becoming a real estate investor by turning it into a rental home makes it even trickier! We have compiled some tips to help you avoid the most common initial mistakes we see when going from homeowner to Real Estate Investor.
Depersonalize Your Home
Your new tenants may want to paint a room or change something, but it was something that you picked and had custom made but people have different tastes. If you have a garden, koi pond, or something that requires extra maintenance, you should relocate it since your tenants may not want the additional hassle or responsibility. Maybe your garage was your workshop, but the tenants aren’t handy and want to park two cars. Whatever it is, there’s a good chance the tenants will not want it and your home may rent for less if you decide to leave it.
Paint Neutral Colors
Paint is one of the least expensive and easiest ways to personalize a property so it’s no surprise that many homes have personalized paint colors picked by homeowners. Maybe one room is pink, another blue, green, and an accent wall in the dining room is red. It’s time to make a change. Some tenants are flexible and might be okay with your colors or okay with painting themselves (assuming you allow them to) but many see a rental as a place they’ll stay for a couple years before they move on, which might be a reason they’re not buying a home, and don’t want to put too much time and energy customizing it to suit their tastes. Move in condition and neutral paint will help you rent it faster.
It’s most likely time for a new paint job anyway. Homeowners often get more “use” out of things like paint and carpet, and they last longer in owner-occupied properties since homeowners don’t move in and out as frequently as renters. Once your home becomes a rental, you will probably need to replace carpet and paint more frequently.
Move ALL Your Belongings Out
Just because you own the property doesn’t mean you can collect market rent but continue to use an area as your personal storage facility. There are many reasons why this isn’t a good idea. It can make it more difficult to rent or cause it to end up renting for less than market value since tenants aren’t getting the full use of the property like they would if they went with another property down the street.
It’s a hassle and inconvenience to the tenants if you need to stop by and get or put things in storage. This will cause them to think twice about renting your property since most people don’t want their landlord stopping by on a Sunday afternoon when they’re trying to relax with their family.
Your belongings can go missing or be damaged. Even if it’s at no fault of the tenants, occasionally movers will accidentally load moving trucks with items that weren’t supposed to go. If you do leave anything, make sure it’s not something you would mind being damaged or never see again.
Sometimes owners think leaving some furnishings behind is a plus since it’s “partially furnished.” Most tenants have their own furniture and see having two dining room sets as an issue. Plus, you may not have the same taste and your modern sofa may not match with their country theme.
No Visits!
You should not go and visit once your tenants move in. If you do drop by unannounced, best-case scenario your tenants will be irritated and seriously consider not renewing their lease. Worst case scenario, they may call the police! While you are the homeowner, in exchange for the rent you transfer the right of possession to them while the lease is in place. If there’s a repair or maintenance needed, then with notice you can go but stopping by because you have memories there and want to “check it out” is not okay.
Hiring us as your property management company helps distance you from your tenants. We do this every day. Property managers know the various rental laws in our area. We keep you and your property from harm. Talk to your tax professional, Property management is a tax-deductible expense and one of the many tax advantages since, according to the IRS, your prior home is now a business.