18 Sep 5-Steps For Turning Your Home Into an Investment
When it is time to move out, selling your home is not the only option. A great way to both retain your valuable property and gain a solid income from it is to transform it into an investment property.
Optimizing the potential money that you can earn from your new investment property, however, is not as simple as posting an ad on Craigslist. In order for this to work, you must treat your property like a new business; here is how you should approach such a business endeavor
1. Determine what additional investments you will have to make
There may have been several problems that you were willing to tolerate that a potential tenant will not. As such, you must audit your home for any issues that could be deal breakers. Major recurring plumbing issues, wall damage and roof leaks are just a few examples of things that you may need to take care of.
You will also need to determine whether or not you will be furnishing the property or not. Adding furnishings to an investment property can make it more attractive and allow you to increase the rent, but this requires you to tackle interior design (which is something that you might not want to deal with).
2. Start preparing for tax season as soon as you start
Investments such as the ones discussed above won’t hurt your wallet as much as you would think. Since every dime you put into your home-turned-investment-property was spent in the name of business, you can write most (if not all) of it off on your taxes. You can even write off the cost of loans.
To learn more, consult an accountant as you make investments in your property.
3. Consider hiring a property manager
Managing an investment property on your own can be extremely difficult, especially if you won’t be living nearby. A property management firm will make sure that everything runs smoothly, so that you can spend more time working, spending time with the family or expanding your investment property empire.
4. Actively search for red tape and hurdles
Government and HOA regulations may require you to take a very specific approach to start renting out your property. Be sure that you are aware of everything beforehand (your property manager should know about all major housing regulations in your area).
5. Get the price right
Now that your former home is ready to rent out, it is time to find your first tenant. Since this is a business endeavor, you will want to get as much money out of it as possible; likewise, you want to ask for a rate that will attract people.
A great way to determine the best rate for your property is to look at what similar properties are renting for. Be sure to account for square footage, location and amenities when making your determination.
Now that you know how to convert your home into an investment property, it’s time to take action. Feel free to contact us to learn more.