5 Things to Think About Before Renting Out Your Condo

You own a condo. Maybe it’s a home away from home, or maybe you’re going to be out of the area for a few months and want to make the most of it. Maybe you’re planning on moving to a bigger home and wonder if it’s worth it to hold onto your condo as a small real estate business. Before you take out a rental ad or say yes to a friend, here are five things you should look at. Depending on the answers you find, it could be fine to rent, impossible to rent, or the wrong time to rent.

1. Your Condo Association

The board that runs your set of condos, the condo association, very likely has certain guidelines in place when it comes to owners renting out their condos. There could be rental caps, which limit the number of rentals for a given associate. There could be rent restrictions that must be set at a certain minimum, designed to keep purchases of the condos high. Review your condo policy and consult with your associate on any questions you might have about these restrictions.

2. Laws and Ordinances

Renting interacts with several state and federal laws. Research your fair-housing laws and the Americans with Disabilities Act to make sure you would comply with anti-discrimination statutes. Also check with local state and city ordinance and regulation laws to learn your responsibilities as a landlord, such as how much of a security deposit you can hold in escrow.

3. Home Insurance

You may or may not have insurance for your condo, but you will need to get or upgrade your current policy. Normal policies do not cover renters, instead you will need to take out a “dwelling policy.” You may want to also consider insurance for the loss of rent due to damage, and taking out liability insurance on your condo in case a renter is injured on the premise.

4. Your Market Expectations

How much do you think you will make? Most landlords make somewhere between 10 and 20 percent profit each year with a property. You might even not break even if problems or unforeseen expenses arise. Are you in a city or neighborhood that has a high demand for property, and if so, can people who would be your target audience afford to pay the rent and deposit?

5. How Will You Get Tenants?

How are you planning on getting tenants? The majority of rentals are found through local papers or Craigslist. How are you planning on screen them? You need to make sure that tenants can afford the rent, and so have to gain their credit rating, as well as their rental history. Contacting the previous landlords can give you an idea on their habits as a renter, both good and bad. Charging a modest fee that can help screen out unwanted applicants, and you can always refund it towards first month’s rent.

The idea of having another source of income is a tempting one. But renting isn’t as easy as simply handing the keys over for a check. Being a landlord means responsibility, both to the law, and to your tenant. If you’ve looked into the five topics above and not found yourself wanting, maybe renting your condo is right for you. H&K represents several condo associates and talk to you about dwelling insurance: contact us today.