What to Consider When Turning Your First Home into an Income Property
1. Discover your financial capability
Before you do anything with regards to turning your first home into income property you need to be sure that this route will work for you and there are numerous factors that determine the feasibility of this investment channel. One of the major determinants of the viability of this route is your current financial capacity. In order to turn your first home into an income property you need adequate money to cover renovations. You also need to ensure that you can secure adequate funding for the project.
2. Consider renovations
In doing this you need to keep in mind that on your renovation cost you can add 25%. What you also need to take into consideration here is the time frame it may take for the property to yield your investment returns. The standard principle is that any refurbishment costs have to be earned back from the property within the space of the first two years. Still on the aspect of your financial capacity you also have to consider whether or not you will be able to cover the minimum bills such as mortgage on the property in case it remains unoccupied for a considerable period of time.
3. Renting/leasing property
In that period you may also have to cover heating costs, the mortgage and various others costs related to the running of your property. The other consideration to make pertains to the question of renting out the whole house or some apartments within the property. In this aspect the size of the house becomes a significant factor. If your house is huge enough you can consider creating up to three or four separate units. This will require more renovation costs but in the long run you will get more returns from multiple units.
4. Zoning laws
Some of the most important things to consider as you go through these options are your local zoning laws. In this regard you have to establish whether or not your particlcular area is zoned for a two family dwelling for example. These will have many consequences for flouting existent zoning laws and you ought to be well versed on this matter in order to make well informed decisions as you consider feasible options of turning your first home into an income property.
5. Responsibilities of a landlord
If you are set to turn your first home into an income generating asset what it means is that you are gearing yourself up to be a landlord. You may overlook the implications of that but fact is that being a landlord will not be an easy responsibility. The responsibilities that you have as a landlord include property maintenance, doing rentals paperwork and making sure that tenants pay in their rentals on time.
If you are located in a very cold climate you will be responsible for snow removal in every winter season. For these responsibilities you may consider contracting the services of a property management company. Turning you first home into an income property can be a great investment venture but you need to consider your dynamics and be sure that if it is for you then you pick on the appropriate approach that will work for you.
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