Switching Gears - Homeowner to Landlord

Whether you’ve decided to become an income property investor or simply rent out a house you used to live in, making the switch from homeowner to landlord requires at least a small change in mental gears. For some, it’ll be more of a challenge than others. To avoid tax and legal complications, pay particular attention to the following issues.

Insurance

As a primary residence you carry homeowner’s insurance, which won’t matter any more than a spit in the ocean if you decide to rent the house out. Once it’s no longer your primary dwelling, get rental home insurance, which covers the property itself and provides liability protection to you. Your tenants need to get their own insurance to cover their possessions. Questions? Your friendly local insurance agent will be a good source of information.

Utilities

It’s not unusual for the landlord of a multi-unit property to pay for certain utilities. If you’re renting out a single unit, though, close out all utility accounts that are in your name. A tenant needs to set up his own account with local utilities. This insures you don’t get pursued for bills that go unpaid.

Dancing with Tenants

Advertising, screening, and leasing your house to a new tenant can be a BIG stressor. Get yourself psychologically prepared for the task. Take the time to do a proper screening. You’ll be glad you did when the tenant doesn’t tear the place up. The lease agreement is important - more than important. Consult with either a real estate professional you trust, or crack your wallet open to have an attorney craft a legally solid document. There should be no confusion as to what each side must do to execute the contract.

Taxes

The great thing about being a landlord is that your property will be eligible for a long list of deduction expenses. Tax laws change so frequently that it’s hard to provide an exhaustive list, but most costs associated with owning, renting, and maintaining your property are now seen as business expenses. Yep, you’re a business owner now, so don’t forget to act like one.

That last point is one Jason Hartman likes to stress as the most important. You’re a landlord now. You’ve got to think like a professional. Even if you decide to hire a property management company to run the place, you’re still the owner, the one scratching checks, and the one the government is going to want to talk to if things get wonky. Don’t let all this scare you. It’s supposed to be fun. And profitable. (Image: Flickr | BLW Photography)

The JasonHartman.com Team
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