How to Turn Rental Property Into Cash Income
If you're lucky enough to own a second property, then you certainly have the means to turn it into a rental property and earn cash income from it. Even if the property isn't in the best condition, you could fix it up and show it off to potential tenants. Whatever you're thinking of doing with it, you need to figure out a way to market it and then learn to manage a budget for your new income.
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Instructions
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Repair any major damage on the property. Broken windows, faulty electrical connections, leaking pipes, and other problems will prevent you from being able to make any money until the problem is fixed.
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Present your rental property in the best condition possible. Make it clean, free of major damage, and slap a fresh coat of paint on it. Invest in landscaping and get someone to mow the grass. If you can, spend some money on new carpets, upgrade your kitchen and bathroom cabinets and counter tops, and install new appliances like an electric stove, energy-saver washers and dryers, and a refrigerator. The more you put into the property, the more attractive it will be and the more you can charge for it.
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Advertise your property. You can do this on your own by placing ads and posting signs, or you can hire a real estate company or other agent to market the property for you. Take part in interviewing potential renters, and do a background and credit check on anyone who seems promising.
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Make a budget that shows how much it costs you to keep the property every month. This should include mortgage, utilities and any other costs associated with keeping the property running.
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Figure out how much you want to charge for rent. Charge enough to cover the cost of what you pay to maintain the property every month, plus extra so you can earn a profit. But be careful not to charge a lot more than other landlords in your area are charging for similar properties, or no one will want to rent from you.
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Set up an emergency fund to take care of any problems your tenants may experience. For example, a broken toilet, a central air system that stops working, or an accident that puts a hole in the wall are all your responsibility to fix when you're renting out a property.
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Put some of the rent money back into the house once you start getting income from it. Use the money for the emergency fund or to make upgrades to the property.
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Tips & Warnings
Check the laws in your state regarding rental properties. Everything from how you perform background checks to how you evict unwanted tenants is governed by law, so you may even want to hire a lawyer before you take on the responsibility of being a landlord.
References
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