You might think the process of becoming a landlord could be complicated, but we laid out a few steps for you to take to help you decide if this is the best decision for you and to help make the process smooth.
Speak with an agent specializing in investment properties
If you’re thinking of buying a condo to rent out, consider reaching out to an agent specializing in investment properties to discuss whether renting out a condo is a smart move. Clever can help you partner with an experienced, local real estate agent as the first step. Working with a good agent will help you determine if this is the best investment for you or you should consider an alternate route.
Before you get started, it’s important to realize that condos do differ from other types of properties, and that will influence how you’re able to rent out the condo.
A condo is a private property with multiple units, owned by different people, or board members. The other board members are the owners of the other condos. The board members are responsible for taking care of anything within the condo’s boundaries, such as common areas, elevators, pools, etc.
There’s a fee each condo owner pays through the homeowners association (HOA), and that fee covers the maintenance of the common areas, insurance of the building, etc. There’s also an approval process to own a condo, where the other members interview you before the sale is final, to ensure you’ll be a good member.
The agent will also guide you through the entire process, from finding the right condo to applying for a loan to negotiations and closing. They’ll give you access to all the condo guidelines and rules beforehand, so you know you’ll be able to rent it out.
Research the rules of your condo
Your condo likely has rules about renting. Some condos have rules about how long the owner must live there before they can rent it out, and others have rules about how long or often you’re able to rent out your home for. Some condos also have restrictions on how many total units can be occupied by renters at one time, so ask about this ratio before your purchase.
Your tenant may also need to be approved by the other condo board members. These rules can all be found in your condo’s governing documents.
You’ll also want to take a look at the minutes from your condo’s last few board meetings to see if any other renters have been an issue or any new policies have been brought up that would affect your ability to rent your condo.
Research if your HOA fees are tax deductible
Another great way to make renting out your condo profitable is for you to claim your HOA fees as a rental expense, therefore making them tax deductible.
Typically, if your condo is not your primary residence, you can deduct the fees. This is important because high HOA fees will take away from your overall profit after paying your monthly mortgage.
Vet your tenants
Besides the fact that you want your new tenant to take care of your condo, if they disrupt the condo community in anyway it could affect your ability to rent out in the future.
Your tenant may need to pass an interview with your board of directors, so remember the questions you were asked and use those to vet your tenants ahead of time to ensure a smooth process.
Next, you’ll want to draw up a lease agreement for you and your prospective tenant.
Tell your new tenant the condo rules
Since you’re the owner of the condo, it’s your responsibility to ensure that your tenants follow the rules of the condo board. Communicate these rules ahead of time, and put them in your lease. Then, add a clause about them adhering to these rules. This will give you a way to enforce the rules and possibly evict the tenant if they do not follow the rules.
If you do your research, and partner with a trusted Clever Partner Agent, you’ll be able to rent out your condo and earn extra income with ease.