An income property is defined by a property, typically one with a structure that generates a positive income. In other words, it makes cash. So how is it possible to make money from your home? If your home is big enough, you have an extra floor or basement that is unused and you have a budget available for a renovation, your house can become an income property.
Rent Having a paying tenant is the only way your home is going to generate a positive cash flow. The question is what kind of paying tenant are you willing to have in your home? Will they have access to your home or its amenities? Where do they park? All of these questions have to be addressed and answered correctly. Only then will you be certain if your home is acceptable to become an income property. Draw up a blueprint and get ready for the next challenge.
Building Codes Now that you’ve addressed the type of tenant/landlord scenario and all of the questions that arise from the new living arraignments, you need to have a chat with the building department. Many questions will come from that meeting as well. How many tenants will occupy the space? How many square feet is the space? What plumbing and electrical additions are being made? Are local deed restrictions preventing your dwelling from being occupied by a renter? Once again, more questions than answers will come at you. But be persistent and it can be done.
Renovating for Occupancy Once the red tape is out of the way and your contactor has the blueprints and building permits in hand, you can begin renovating. Many homeowners choose to do part(s) of the renovation project themselves. For the most part this is a good thing. But know your limits; it can quickly become a disaster if you’re overloaded with work. Scheduling your time efficiently is very important and should never be underestimated. Choose projects that are within your skill set. Painting, trash removal and landscaping are good projects for homeowners without prior construction experience and are good chunks of the budget that can be eliminated.
Choosing your Tenant Now that the space has been renovated, it’s time to pick a tenant. Becoming a landlord has certain rights and privileges as well as limitations. Carefully read any law books on the subject before beginning the selection process. Your local library will have most of the material you will need to begin. Setting a price range is also critical to which type of tenants you want to attract. A real estate agent or appraisal officer can give you a good estimate of the right price to charge for your newly renovated income property.