Are you considering joining one of the fastest-growing populations in post-bubble America: the Accidental Landlord?

Carolina Living Property Management has joined one of the fastest growing professions for Real Estate Brokerages which is Property Management in Charlotte.

The inventory of homes for sale is twice as big as it was three years ago, which could mean a longer wait to sell – and a longer time to shoulder two mortgages or a mortgage and rent payment if you have to move.

The rental market, on the other hand, is robust.  Currently Carolina Living Property Management has average days of on the market for it’s rental properties at less than 45 days.

So, what goes into deciding if renting your Charlotte area home is right for you?

When Renting Beats Selling

To make the rent-vs.-sell call, you need to know what your home could fetch today. Let Carolina Living Property Management research and provide a ballpark figure of the price your home will bring.

Can you charge enough in rent to cover your costs or how much can you handle if the amount is less.

You’ll need to use  the amount of  typical rents provided to you and then compare that with your carrying costs. Those include not just mortgage payments, taxes and upkeep but also a bigger insurance tab: Your homeowners policy may go up if you don’t live in the house, and you’ll need additional liability insurance (for roughly $250 a year, you can get a $1 million umbrella policy).

Add on another 5 percent for unexpected maintenance or a gap between tenants. (Note:  Many of our clients purchase a home warranty policy to cover potential major issues.  Estimated cost $400 a year) If you want to hire a property manager to handle paperwork and repairs, hire Carolina Living Property Management and cut your projected rent by our low 8 percent fee.

• You have other funds for a down payment

If you have to rely on the equity you’ve built up in your current home to buy your next one, you’re probably not a candidate to rent unless you plan on renting yourself.  If this is the case,  make sure your total budget will allow you to rent a home you will be happy in.

• You’re sure prices will rise

Becoming a landlord is a bet that you can earn more renting your home and selling later than you would by moving on and putting sale proceeds to work elsewhere.

How much rent you can charge is important, but so is what’s ahead for home prices (see forecasts for 100 top markets at cnnmoney.com/realestate). In fact, even if the rent doesn’t cover your out-of-pocket costs, a big turnaround in your market could make the numbers work

You’re not giving up a great tax break

If you rent for more than three years, you endanger a precious benefit of home ownership – the capital-gains tax exemption. Live in your house for two of the five years before you sell and you’ll pay no taxes on the first $250,000 in profits ($500,000 for a married couple).

But become a landlord for three years or longer and you’ll owe capital-gains taxes on all profits in your home since you bought it. That could wipe out more than a year’s worth of recovery in your market.

Are You Landlord Material?

Be sure to read “what we can ask prospective tenants“.  This will give you some insight into what you or your property manager is allowed to ask or advertise for a prospective tenant.

1. Keep the Place as clean and safe as possible. Get rid of garbage in a clean and safe way.  Keep the plumbing (toilet, sinks, bathtub) as clean as possible.
2. Notify the landlord or property manager of needed repairs.
3. Do not do any damage to the premises. If the tenant or someone visiting damages the premises, the tenant is responsible.  This means the landlord may charge the tenant for the repairs.

Note: Source Elizabeth, Martin, Harch and Bunn. April 2009.

1. Obey the Local House Code.Most cities and some counties have passed a law which is called a housing code.  The law tells the landlord what conditions have to be provided and maintained, including such items as hot and cold water facilities that do not leak, widow screens, walls ceilings and floors without holes, door locks and other basic necessities.  Cities and counties with a house code will have an inspection department whose duties including inspecting and informing owners and tenants of needed repairs.  This group is also responsible for enforcing the code.  Failure to make the required repairs can result in the premises being boarded up and not allowed to be rented unit repairs are completed.
2. Make any repairs needed to make the premises fit and habitable.
3. Keep the plumbing, hearing sanitary and electrical equipment in good and safe working order.
4. If the landlord provided appliances, such as stove or refrigerator, he/she must fix the if they break down.
5. Install smoke detectors.

If you have any questions about your rental home, contact your source for Lake Norman Property Management and Charlotte Metro area Property Management at 877-834-1880 or at our contact page.

Note: Source Elizabeth, Martin, Harch and Bunn.  April 2009.

A lot of landlords and property managers only go to their properties when there is a problem. The trouble is, by the time a problem arises, you usually have many more problems to deal with—along with the problem that originally brought you to the property.

You should have a maintenance plan or property management team like Carolina Living in place so you’re in your property at least once every six months. When you get a new tenant, you should inspect their unit within the first two months. You want to make sure that the tenants are treating the property with respect. You want to point out any damage that they may have caused, and tell them that you will be sending your maintenance man over to fix it, and how much it will cost them.

Do this at the beginning and it will set the tone for your relationship with the
tenant. Then every six months or so, you’ll want to do another inspection. You can
either schedule it or surprise them. I like to surprise them; then I know exactly
how they are living.

You’ll want to go into the basement and make sure it is not being used as a storage
facility; same with the attic. When tenants store items in your basement or attic,
those are usually the things they leave behind when they move out. Then you have
to pay to dispose of the items. If these are allowed, then the return of security deposits should also be tied to the removal.

You’ll also want to check the plumbing inside the units and in the basement for
water leaks. The most common profit-losing problem is a toilet that will not stop
running, or a dripping sink. In no time you could be faced with large water problems.
Make sure tenants are not throwing trash all over the yard, or leaving unregistered
cars on your lot. Once trash starts piling up, it attracts more trash. Pretty soon
your property is the neighborhood junkyard.

Periodic inspections will save you money and tenant turnover. Then when problems arise, they will not be big ones.

Carolina Living Property Management is your Charlotte Property Management and Lake Norman Property Management of choice. We do inspections and drive by’s periodically to make sure your asset is being taken care of.

We can all renovate a house and have it come out looking like the Taj Mahal, but that will not put the most profit in our pockets. You should put out a quality product and do your repairs properly. You shouldn’t cut corners or hide defects in a house. At the same time, if you’re renovating a $75,000 house, you do not want to install marble floors, Corian counters, and replace the exterior siding with clapboards.

You want to do the repairs that will give you the biggest return for the money. If you’re repairing a rental unit, you should use materials that will last. Plastic commercial tile floors for the kitchen and baths are better than the 12” x 12” stickons; commercial-grade carpet and countertops are designed to hide cuts and dirt. If you’re renovating a house for resale, you want to focus on the kitchen and baths.

Spend all of your extra rehab money in these rooms, because these are the rooms that will sell your house. They should be bright, clean and shiny.

Bring the house back to a like-new condition without making everything new.  It’s amazing how a little paint and cleaning can change the appearance of a house or an apartment. When planning your repairs, repair anything that is broken or outdated, but don’t go around the house installing all new cabinets and counters if you don’t need them.

Remember, make it nice and put out a quality product, but at the same time, keep in mind that you are not going to live there. The people who buy the house are most likely going to make changes, anyway.