So you have decided to make some extra money by renting out your home in the Indianapolis Area. Before making the leap, there are a few things you need to consider.
Did you know that most states have Landlord/Tenant laws? These can affect what you can and cannot do within the rental relationship? Indiana is known for having good Landlord/Tenant laws. They are typically fair if everything is in order. Many other States have very tenant oriented laws and protections. This is why we see may out of state investors purchasing homes in Indianapolis. How about local health codes and/or city or county licensing requirements for rental properties?
The investor may be held liable if there is a preventable incident caused by a safety or health violation. Do you have to have carbon monoxide detectors? How many smoke detectors are required? Where do they need to be placed? Do you have appropriate placement of stair railings or are there tripping hazards present? Do the locks have to be changed in between tenants? When is rent due and what legal late fees can be charged? Then there is the question of security deposits. Whose money is it? How does it need to be held or accounted for? When does it need to be returned and what types of damage can be paid for out of the security deposit? How do you make a claim to be reimbursed for expenses incurred by the tenant?
A good property manager can help navigate these issues and ensure that the proper steps are taken and protect you from a variety of liabilities.
Taxes and Insurance
You will lose the homestead exemption for your property taxes once the home is recorded as a non-owner occupied property. In essence, this will double your property tax obligation. If your investment property is in Indianapolis, you will also need to register the property as an investment property. Having an investment property without registering with the City may expose you to penalties and fees.
As you can see there is quite a bit to know about being a Landlord in Indiana or Indianapolis. There are many ways to put your investment property and yourself at risk by not following guidelines, rules, ordinances and laws pertaining to rental properties. Before renting out your home, make sure you familiarize yourself with these items and talk with your insurance provider. Make sure you have an investment property or landlord policy. A homeowner’s policy will not cover loss, damage or injury once you are no longer the primary resident in the home. You will need to plan spending three to seven hours to familiarize yourself with the various legal and insurance considerations before renting out your home.
Marketing and Showing your Rental Property
It’s not very difficult to create a rental listing on a few websites on the internet these days. Are you using professional photo’s for your listings? A good property management company understands the importance of professional photo’s and video. If you are not getting the response that you intended, you can purchase premium advertising through many of these services, but it can be somewhat expensive. Property management companies already have accounts for these premium and featured advertising services worked in to their marketing structure.
Because the market andy lease dozens of homes each month, they can afford to pay for this type of advertising. A single homeowner or investor may not want to pay the hundreds of dollars to ensure that your home is getting views. Many Indianapolis property management companies also have established social media accounts where prospective tenants can see the listings and pass it along to their friends.
After you have a successful listing and proper signage, you will likely have to begin fielding phone calls and emails. They will want to tour the property. This can be a very time consuming process as you will have to work around their schedules. Many times scheduled viewings may not even show up. Sometimes after they show up, you find out that they have had multiple evictions, don’t have a job, or other things that will likely disqualify them from renting the property. This ends up being a big waste of your time and can be very frustrating. Learning how to ask the pre-screening questions before scheduling can save a lot of time. You may also want to confirm the appointment before driving out to the investment property to ensure that you will not be wasting both your time and gas.
Next you will need to have a way that the prospective renters can apply to rent your property. Placing the wrong tenants can be a nightmare. It can cost you thousands of dollars or more. There are services that you can use to screen tenants. These will pull credit history, criminal history, and potentially eviction history, but are you familiar with the risk factors to look for. At Real Property Management Indianapolis Metro, we review hundreds of applications every year and have reviewed thousands over the years. Our strict screening criteria ensure that we rarely have evictions and place the highest quality tenants that are available for the location of the property.
You can purchase leases online or at an office supply store for low prices ($30-$40). The leases purchased this way are usually created to for a broad market. They may not even be compliant to your local laws, exposing you to undue risk and liability. For instance, Carmel, Indiana just announced that they will be fining any resident who is using renting their property as a vacation rental without applying for proper zoning variances and permits. Sometimes there are HOA restrictions on how many rentals can be in a neighborhood. Also, use caution to ensure that you are not inadvertently violating renter’s rights. Because of fair housing and privacy regulations, there are questions that may be unlawful as a landlord to ask.
It is a good idea to have your lease reviewed by legal counsel. This will ensure the lease protects your rights as well as is compliant with your state and local laws and ordinances. You will need to plan spending two to three hours finding a lease, as well as $100 to $300 for an attorney to review your lease to ensure that it complies with regulations.
While it may make sense to attempt to navigate this activity on your own a good and experienced property manager has already developed systems and policies to address these issues and more. They understand the importance of ensuring safety in the home and how to protect from various risks. A good property manager will specialize in marketing and leasing rental properties. They understand Landlord/Tenant laws as well as Fair Housing Laws. Professional tenant screening can help eliminate the risks that come with placing bad tenants. At every turn, they should be seeking to reduce risk and costs.
Real Property Management Indianapolis Metro is an established Indianapolis property management company. We have years of experience in the Indianapolis area. RPM has also developed a proven business model over 25 years in over 270 markets. Managing properties in Indianapolis or any other market can be difficult. Using a professional property management company can help you avoid these issues all together. Not only does property management save you time and make things more convenient, it may also save you headaches and money that comes along with those headaches. Whether you are looking to rent your home out of necessity or to create a retirement income, considering an Indianapolis property manager is a great way to go.