When you are buying a home, one of the options that you may consider is getting a home big enough to put a rental property into it. But before you do, you should consider the potential pitfalls that may arise. Here are some things you need to remember about rental properties:
Image: Karat / Flickr
Make sure you understand all of the relevant laws
If you want to add a rental property to your home, first go to your local municipality office. You’ll need to find out if the local zoning laws even allow you to add density to your home. When you do decide to add a rental property, you’ll also likely have to get permits. The people at the office will also keep you informed about other things you need to know.
Some of the issues you’ll need to address will be how far from your property line your new apartment will be (especially if you are adding the apartment to the outside of your house), the minimum square footage that the apartment should have, and whether you need to provide parking. There are also fire codes that you will need to address, such as a minimum separation between housing units. The units will also likely have to have fire alarms, fire extinguishers, a fire escape, and all of the building materials will have to be up to code.
Understand if you can deal with tenants
Problem tenants can be such a nightmare, they have even made horror movies about it. Before you start inviting people onto your property, make sure you know all of the relevant legislation, particularly the process that is required to evict tenants.
When you are a landlord, you also have legal requirements to your tenants. You have to make sure you need to keep the rental units in livable condition, and you’ll have to do all necessary repairs. In some municipalities, tenants can even demand a freeze in their rent if the unit is not maintained well. You’ll also need to follow the rules on how often and how much you can raise rent.
Even more importantly, can you deal with the stress that will sometimes arise when you are dealing with tenants? Sure, you can make some money renting out a unit to a tenant, but in the end, you have to decide if it is worth it.
Next week, I’ll provide some tips on things to keep in mind if you are a house buyer interested in acquiring a property with a rental unit.
Heleen Jacobsen
Broker of Record with InfoMarket Group GMAC Real Estate
www.infomarketgroup.com
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