Landlords, advice, please?

[dillonandmarasmom]

We will be renting our home for 2-3 years while living in another, b ut we hope to come back to it when our other stay is over. So, I have some questions for those who rent out homes...

1) How much money would you put into getting a home ready for renting?

2) Should we do the things we will want when we move back, like our new kitchen countertops, new tile floors, etc, or just do a quick touch-up of what's there for now?

3) Will our mortgage insurance needs change? Lessen?

4) How often do you "visit" the home(s) you rent?

5) Anything else I should be thinking about??

Basically, we love our little home, and have plans to add on when we move back. By then, we will have a new family member, so we want to have a couple more bedrooms and a bathroom. So, we will be doing a lot when we come back...which means we'll be gettign a 2nd mortgage to finance construction, etc (probably).

I just need help thinking this through.

Thanks!!

[lifeguard]

We rented out our home for 1.5 years while we were out of the country. We had just finished major kitchen renovations & just accepted that some things might get damaged in our absence. Everything else we wanted to do renovation wise we left for after as having renters in the house does mean wear & tear & for us we were giving the renters an incredible deal so we weren't worried if things weren't "perfect".

We did have to make a change to our house insurance for the time the renters were here. We just spoke to our insurance agent & the changes werre made really quickly.

As we were out of the country we had my Mom as the superintendent. She was available when there was problems & also did a few preventative maintenance things (like ensuring the outside water was turned off before winter & changing furnace filters, etc.). When we were in the country we would usually let our renters know in case they had problems but otherwise we generally just drove by to make sure things looked good on the outside.

We also had some major outside work done while we were away (some new roofing & siding).

[dillonandmarasmom]

Thank you!

Do you know what the changes were to your insurance? I know we won't need to be insured for belongings, so is it just basics like fire, major repairs to structure, etc?

[D&S Mom]

I know when I rented a duplex we had "renter's insurance" on our belongings. I don't know how popular this is for tenants to have but if I remember correctly it didn't cost us very much at all ($300 per year or something?)

Call your insurance provider and ask.

[dillonandmarasmom]

Originally Posted by D&S Mom

I know when I rented a duplex we had "renter's insurance" on our belongings. I don't know how popular this is for tenants to have but if I remember correctly it didn't cost us very much at all ($300 per year or something?)

Call your insurance provider and ask.

And you were renting, not renting the duplex out, right?

So, I was thinking of reducing ours.

[cristeen]

Originally Posted by dillonandmarasmom

And you were renting, not renting the duplex out, right?

So, I was thinking of reducing ours.

Don't reduce it. If anything, you should think about increasing it.

Call your insurance agent. Let them know you'll be renting out the house and need to be covered. It generally requires a change to the policy.

If you're currently carrying a mortgage on this house, the mortgage company requires that you carry fire (and possibly flood) insurance in a certain amount or they can get nasty. And the insurance company WILL notify them of any changes to the policy. Generally speaking, lowering your coverage isn't even possible because of it.

I think you can also write into the contract with the renters that you require them to carry renters insurance on their own belongings, so that you don't get hit with that if something happens.

Personally, in answer to #1&2, I would only put money into the house enough to make it liveable. We've discussed the possibility of having to rent our house out, and I have a list of things that would have to be done first... redoing the back porch so that it meets local code is top of the list. As it is right now, it's not safe for adults, much less children. We might replace the hot water heater now rather than later, since we know it's already past it's "use by" date. I'd have a plumber in to repair the bathroom sink that is constantly clogging, I'd replace the kitchen counter (crumbling 40 year old tile) with formica or something else cheap, and I'd put flooring down over the subflooring in the kitchen (to prevent more damage). And then we'd discuss what to do with the floor furnace and the bedroom heater (which doesn't work).

What I wouldn't do - sink a lot of money into landscaping. Put window coverings over the rest of the windows, put in a new fence, remodel the kitchen, refinish the floors, increase the insulation (all things on the list of things that need doing)... basically anything that is "extra" or "luxury". I would however consider including a clause in the lease that a housecleaner comes in once a month to take care of the hardwood floors (someone paid by and answerable to me - who can let me know if the house is being trashed). If you already have landscaping in, consider hiring a service to take care of that as well. Just make sure that the rent you charge covers the PITI AND the costs of the housekeeper/gardener.

[ASusan]

ditto Cristeen.

Get a local agent, if you can. In our city, it was required. It was also required to be inspected and certified by the city to have it as a rental unit. The fine for avoiding this was quite high.

I did the porch railing to bring it up to code.
Deck was washed and stained, as I saw this as part of regular maintainance.
Did some painting because the paint was beginning to peel, have mildew in the bathroom. It made sense to do the bedrooms at the same time, but this wasn't done in prep to rent, just as a part of between-tenant maintainance.
Did not do kitchen or other major renovations.

Your insurance agent will help you. Mine was called a landlord's policy, and it was slightly more expensive than the regular policy. (or maybe the rates would have been going up anyway) You should require your tenants to carry a renter's policy.

In NY, there is something called the STAR program, which gets the homeowner out of property tax for the first $30,000 (or $60,000?) of the home's value. When you rent, this goes away. The property taxes on the house brought up the escrow payment way above what I could EVER charge for rent. My mortgage + escrow went from $925 a month to $1,200 a month. I was barely breaking even, but I could never get $1,200 a month in rent. I sold the place. Closing is 2 weeks from today. Obviously, you plan to go back. But be aware of things like this - you may not be able to cover all your expenses with what you charge in rent.

ETA - be prepared for ANYthing. I once received a phone call from an old neighbor/colleague saying, "(other neighbor) just called and said that there is water pouring out of the front of your house." I was two states away, having just left a post-op doctor appointment. I made a crazy number of phone calls to locate the tenant, call the local police who sent up fire trucks...Turns out the outside pipe had burst. The firefighter showed tenants how to turn it off from the inside, and it was easy to fix come spring. A very small thing, considering I was picturing a house in which the entire basement and first floor must have been flooded in order to have "water pouring out of the front of the house"!!!

Unbeknownst to me I also had a potential tenant keeping her
pit bull in my garden shed. (don't ask how THAT happened). Sh!tting all over and barking continuously.

[annekevdbroek]

I would do basic repairs, as a PP mentioned replacing appliances that are pas their 'use by' date. I would not make updates or decorate etc. as you will probably want to enjoy those things youreself with they are 'new' and they would do little to increase the rent you can get for your house.

Do very carefully select and screen your tenants. Verify empoyment and income, call references. I've been a landlord and in 15 years the problems I've had have been from bad tenants, not house problems. I can take care of repairs, etc. quickly. But if you get a lousy tenant you are stuck, at best for the duration of the lease, at worse for the duration of eviction.

Make sure there is a local person who helps manage the house. Who can check on things, etc. Be sure the process of getting repairs done is understood and in writing. E.g. if there is an emergency (fire, water pouring out of something - call these people (911, 24 hour plumber). All other repairs require prior approval by the landlord. Call the landlord (or manager or whatever) at xxx-xxx-xxxx. Unauthorized repairs will not be reimbursed by landlord. Heh - why do I mention this? I speak from experience.

Update your house insurance. Leased property insurance is not the same as your home insurance, its a different policy. Call your insurance agent. Your rates will likely go up slightly even though you won't be insuring your contents.

Contact the property tax dept in your state and see about the homestead exemtion. You only get that for your primary residence. So, your property tax will likely go up a hefty percentage (it was about 20% for us).

[SleeplessMommy]

I would skip the kitchen upgrades ... you will be pissed if you get new counters or cabinets and they are damaged by tenants.
And based on personal experience - security deposits are very important!

[dillonandmarasmom]

Thanks everyone.

We aren't doing any upgrades now. We are repairing dry rot in the bathroom, and replacing the floor. It just happens that we have beautiful Italian tile we got from freecycle to put in there. An accidental upgrade.

Ohterwise, we are finishing some projects that have been in the works for a while. This house is rock solid, so not too much to do otherwise.

We'll probably just visit our insurance agent and have them deal with whatever we need to do. We don't have to register anywhere to be landlords around here. Just rent it out. The rest is up to us.