How to Make Money Transforming a House Into a Long-Term Rental
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The COVID-19 pandemic has changed every facet of modern-day life, from how people socialize to how they shop. It's also impacted the real estate market. Consumer Affairs reports that widespread financial anxiety due to the pandemic's economic fallout has sent many would-be sellers off the market. If you have a house you aren't able to sell now, you may be better off renting it out. This guide explains how to convert a home into a long-term rental that will provide a steady income.
Redesign the space to make it attractive for long-term rentals.
Before you can advertise your rental property, spruce it up. Clear out clutter and put unneeded items in storage. Badger State Storage offers affordable rentals with prime locations in Fox Valley and beyond. Once you've cleared out space, look for ways to make it more attractive to renters. You might give it a fresh coat of paint, plant fresh flowers in the garden, install high-end appliances, or add quality furniture. According to Landlordology, you can charge 15–20% more for a long-term furnished rental.
Determine an appropriate rental rate in light of COVID-19.
You don't want to price your property too high, or you may have trouble finding renters. Alternatively, you don't want to rent it for too little and lose out on possible profits. To find a happy medium, check out what rental properties similar to yours are charging on a platform like Trulia. Take factors like the number of bedrooms and bathrooms, square footage, and neighborhood into account. As mentioned, furnishing also makes a difference in price point.
Figure out your tax obligations for rental income.
You will have to pay taxes on any rental income. Check out your state's guidelines to determine how much money you'll lose to taxes. You might also consider setting up a Limited Liability Company or similar legal business entity to manage your rental property income. An LLC will help protect your personal liability and can provide tax benefits. It will be easier to write off rental property maintenance and upkeep fees, for example. Check out business formation services like ZenBusiness, which make it fast and easy to set up an LLC.
Create attractive advertising to stand out in the crowded COVID-19 market.
Getting great tenants in the COVID-19 market may be tough. Many Americans have lost their jobs, and landlords are competing to find renters who are gainfully employed and reliably able to pay. Put effort into your advertising materials. Create a compelling ad, starting with an attention-grabbing caption, highlighting amenities (e.g., a yard or stainless steel appliances), and including quality photos.
Find the perfect tenants, keeping COVID-19 limitations in mind.
U.S. unemployment rates have reached levels rivaling those of the Great Depression, according to the University of Minnesota. You will have to thoroughly vet any potential tenants to ensure they are financially stable. Money Crashers offers tips on vetting potential tenants, including requesting an application, running a credit check, and conducting a background search. Once you find a tenant, create a legally-binding lease. You can find printable templates online but it's best to have a lawyer review the final paperwork.
As this guide makes clear, it will take some time, investment, and effort to transform a house into a lucrative long-term rental property. Once you've completed the above steps, however, you should have a steady source of passive income that can serve you for years. After the COVID-19 pandemic has subsided, you can sell the property or keep on renting it out.
Trust Gopher State Storage to safely hold any items in your house that aren't suited for a long-term rental. You can view storage rental option and locations online at www.storagePL.com.