Things To Know Before Becoming a Twin Cities Landlord
Considering gaining added income by taking in renters? Many Twin Cities homebuyers are purchasing a home for rental income. News filled with 2014 housing predictions are good for the residential housing market, anticipating a trend that more buyers will purchase homes for rental income. If you are considering the option; however, are many factors to research first. Whether you have a home conveniently set up for renting out a spare room, a full basement apartment, a mother-in-law space above your garage, or are purchasing an investment property, renting can be an appealing way to gain income to offset your home monthly mortgage payments.
Truila charts changes in the housing market and just how it is moving back to pre-bubble norms. Trulia’s Chief Economist Jed Kolko revealed his outlook on how the U.S. housing market will be different in 2014 and anticipates that more homebuyer will endeavor to become Landlords. Truila predicts that in 2014, repeat Minneapolis home buyers will take advantage of home prices increases and rental income will be come a means to offset the higher price of a home.
Value Reasons to Become a Landlord
In a March 7 announcement, titled "Moody's sees growth for single family rental securitizations". The Twin Cities improving economy along with a steady increase in employment is eliminating uncertainty and raising confidence in the Minneapolis - St. Paul real estate market, which increased a homeowner value reasons to become a landlord.
"A slowly improving economy will boost the demand for both rentals and owned homes,” says Moody’s Managing Director Navneet Agarwal. “But rising interest rates and housing prices will make buying a home less affordable, increasing the attractiveness of rentals. Borrowers with a checkered credit history also find it more difficult to obtain mortgages."
The Builders Associaiton of the Twin Cities (BATC) February Hot Sheet highlights how rental housing has driven a real recovery for the Twin Cities residential investors in the housing market. Shawn Nelson, BATC’s 2014 president. Smaller, close-in suburban single family projects are being reported including a few well-located, primarily upper market residential rental projects, points out Michael Lander, president of Minneapolis-based Lander Group.
Twin Cities is a Great Investment Market in 2014
March 7th, 2014 the University of St. Thomas Real Estate Matters in a post titled MN Court of Appeals Upholds Winona’s “30% Limit” on Rental Licenses addresses the publics interest in the saturation of rental housing. With more metro real estate buyers seeking to get in on the opportunity for rental income, there are limits as to the saturation point of rental homes in a residential neighborhood. The Minnesota Court of Appeals recently upheld a City of Winona ordinance limiting rental licenses. The ordinance caps the number of properties legible for rental certification to 30% of the properties within one residential block. Licenses for a rental property are granted on a first-come first-served basis.
Many are surprised that the Minnesota judges rejected the homeowners’ intent to rent safe housing to safe renters. The League of Minnesota Cities said that the Appeals Court’s decision will have a significant, statewide impact on Minnesota cities including the metro. "We in no way diminish the impact of the 30 percent rule on the appellants’ ability to use their properties as they would like. We easily conclude that the public has a sufficient interest in rental housing to justify a municipality’s use of police power as a means of regulating such housing," stated Judge Michelle Larkin.
Twin Cities is a Great Investment Market in 2014
The ruling has raised concern by some Twin Cites homeowners as to placing a limitation on their ability to rent their houses. did not constitute unconstitutional conduct. In the end, the court found that the 30% rule to limit the saturation of rental housing was rational, and did "not delegate legislative power to other property owners," it affirmed the district court’s award of summary judgment to the City of Winona.
Twin Cities is a Great Investment Market in 2014
It takes 30 seconds to find out how much your home can sell or rent for. Home Destination can help provide you with the tools to determine the cost of renting or buying the type of home you are seeking. If you are interested in making Twin Cities residential home investments, you may well find yourself on the road to guaranteed income. Read more about the latest housing data indicating the trend that the Twin Cities rental market is heating up.
Whether you are paying cash or financing the purchase of the rental, the Twin Cities is a great residential investment market in 2014. After expenses such as property taxes, insurance and estimated maintenance repairs, some landlords are gaining $600 or more per month in cash flow. The return will be based on how much you pay for the property, or cap rate. Opportunities are available in multiple residential communities across the metro given the combination of the upward trend in home prices, low interest rates and a strong rental market. Read our related post on things to know before renting your Twin Cities home.
Become a Well-Informed Landlord Before Your Are One
Read and research to better comprehend what both your rights and responsibilities will be as a landlord. Read landlord information provided by the Minnesota Attorney General's Office. Understanding the Residential Tenancies Act in order to be protected as a landlord. If your prospective tenant asks well-intended questions, you will be able to better articulate clear roles and responsibilities between you and your tenant.
Things To Do Before You Rent Out Your Home
* Talk to your insurance company: Notify your home insurance company to avoid liability.
* Ensure your rental suite is legal: Make sure your suite complies with municipal bylaws. If the suite is not up to standards, you will not be able to get insurance.
* Learn from other landlords: Do your research and talk to successful landlords who can provide precedent. Tapping into the expertise of successful and experienced landlords is invaluable for first timers.
* Understand the responsibility and time commitment necessary in being a landlord and, if you are considering renting out a room in your home, make sure that you are comfortable making concessions in terms of your personal space and privacy.
* If you are planning on purchasing an investment property, speak to a local trusted Realtor about your goals for assurance that the Twin Cities home you buy as a rental investment is appropriately located to draw quality renters, fixed-up and move-in ready to attract tenants where you will both be happy with the housing arrangement in the long run.
* Screen tenants: Choose tenants carefully. Make sure that you have prospective tenants fill out an application. Be sure to check references and carry out a credit check through a credit bureau.
How to Process A Tenant Application
When asking a prospective renter to fill out a rental application, a reputable landlord makes it clear whether or not and how they are being asked for a security deposit. Generally, it is not wise to require payment towards a security deposit until you have already selected the applicant has and you are both prepared to sign the rental lease. Clearly establish in writing just how it will be refunded if you decide not to renew the rental agreement in the future or if the tenant decides not to rent to you on-going. Clear and documented agreement will prevent the possibility of fight over a money refunded later.
Top Of the List Rental Property Conditions Include:
Home Destination provides a list of suggestions of serious items (but are not limited to) that you must take care of. One route is to cover all you can in advance of renting out space you own; then know that a renter has the right to give the landlord proper notice and adequate time to make necessary home maintenance and repairs needed that keep the home habitable and conducive to keeping a great renter.
Rental Utilities Are Working & Designated
Ensure proper supply of heat, light, electricity or water to the rental space. Determine in advance if you are responsible for the utilities, or if separate utility meters are in place to measure and send payment accordingly to the renter.
Adequate Waste Disposal
Ensure adequate sewage disposal; this will protect your property from rodent infestation issues. Provide proper container for normal garbage waste and disposal. Have an agreement in place that wastes are not to be overflowing and are available to removal in a timely manner.
Structural Soundness of the Rental Property
By calling in the services of a Twin Cities home inspector, you will be assured in advance that there are no structural defect that presents a serious threat to resident's physical safety. If you provide garage access, keep it in good repair prior to signing a less, and specify that it needs to be kept to the same standard and is not open to trespass.
Ensure No Lead Paint Concerns May Arise
Take a close look at the condition of painted surfaced, particularity if it is an older home ((built before 1978 for federal law). Identify and remedy any lead paint hazards that the previous homeowner may have failed to reduce. If a tenant sends a written "Notice of Defect" to a landlord that there is chipping, peeling paint or a child with elevated blood lead level in the property, the landlord must respond by performing Modified Risk Reduction Measures within 30 days after receiving the notice.
Protections Against Fire Hazards Are In Place
Check the rental unit for installed and working smoke alarms located as required for new dwellings; ask your inspector if they are interconnected and hard wired as they should be. You will want a provision in your rental agreement that requires the property to be maintained to a level that protects fire risks and allows easy access to all entrances in case any emergency service is needed. Minnesota requires that smoke detectors should not be located closer than three (3) feet from the door to bathroom or kitchen. Any smoke detector located within twenty (20) feet of a cooking appliance must be equipped with a silencing switch or be photoelectric.
Speak With An Attorney and Have Your Lease Agreement Prepared In Advance
Speak with an attorney to be sure you are protecting your proper properly. Draft a clear lease outlining everything. Include the services you will give your tenant. Make sure you keep the lines of communication open. Determine in advance how you will notify your renter if you plan to access for home routine maintenance and inspections. One thing a tenant can do is to report the landlord to local authorities if there are serious lacks in communication and upkeep.
Determine the Number of Occupants in the Rental Space and How to Manage Changes
One thing to be aware of if you’re renting out your home, be clear with the tenants that the tenancy agreement holds all occupants jointly liable for the rent and any damages. Determine just how many occupants fit comfortably and safely in the space. Stick to the number of individuals they may reside in the rental space. Make sure your rental agreement specifies that you must be notified well in advance if there will be any change requests in just who may reside there. It is not uncommon for a renter to feel that life has changed and the needs of a child, sibling, significant other or partner mean adjustments to their living arrangements. However this is your property and you must keep the final say.
"It’s also a good time for investors to transition to purchasing rental homes rather than flips. As families relocate here, we will need the inventory of rental homes for those families that may have blemished credit." ~ www.investorsbeat.com/
Contact Home Destination at 612-396-7832 if you are considering buying Twin Cities homes to gain rental income. Read more trends in the Twin Citis rental housing market.
** Download the Minnesota Rental Property Checklist
Download the Landlords and Tenant Information from the Office of Minnesota's Attorney General
Download the State Ruling on Rights to Rent a Home and 30% Rule in Winona, MN
Download the Minnesota Landlords and Tenants Rights and Responsibilities Guide.
Jenna Thuening, a Twin Cities residential Realtor keeps Twin Cities homeowners up-to-date on news that assist the decision to become landlords.
11200 W. 78th St
Eden Prairie, MN 55334 Phone: 612-396-7832
Jenna's home page: homedestination.com
If I'm out in the field, you may quickly reach me by email: firstname.lastname@example.org and note how I can help you, or leave a message on my voicemail and I will return your call as quickly as possible.