Since my marriage, my wife and I have owned three homes and each of them provided for either a two-family or an accessory apartment arrangement, which, especially when we were young, helped keep the wolf from the door. And once moving to Westchester and realizing at a certain point that our taxes had more than doubled since purchasing our home, we could say, well at least the rental income buffered the sticker shock when the tax bill arrived.
Making good use of surplus square footage and deriving added income are the reasons most homeowners consider being landlords, but the challenges and responsibilities of being on call 24-7 are not for everyone. From my own experience I have gathered some advice here for anyone considering the purchase of a property that would offer a rental income opportunity.
The first step to becoming a landlord is to see what the town code allows in your municipality, if allowed at all. In my town, accessory apartments are allowed with a special use permit which remains in effect for a period of three years, then must be renewed. There are certain restrictions about square footage relative to the overall size of the house, depending on the town, and other restrictions as well. I know at least one couple, for example, who was disappointed to learn that their basement could not be converted into a rentable apartment because the ceiling was too low.
In the suburbs, most homeowners with accessory apartments are landlords under the same roof as their renters, while others may own a completely separate property for which they may hire a property management firm to manage it for them.
The ideal is to have the renter’s accommodations under the same roof, yet as private from your own living space as possible, with its own entrance and outdoor recreation space.
The most important aspect of finding the ideal tenants who will be living under the same roof as homeowners is qualifying them for their credit rating, work status and references. The internet has made this easier than when we first started renting and judged prospects mainly on whether they seemed like upstanding citizens. Luckily, our intuitiveness served us well, but today we would recommend much tighter scrutiny of prospective tenants.
Each applicant 18 years or older should be provided a pre-printed form to list his/her name, birth date, social security number, and previous landlord contact information for the past two years.
The form should also include the statement that indicates you will run a credit check. There should also be a signature line when the prospect consents to allowing the credit check. Some homeowners charge the prospect fee for requesting the credit report from the bureaus or credit check websites such as Experian, TransUnion or Equifax. CreditReport.com has an option for landlords to receive all three credit reports at one time.
When reviewing the reports, it’s prudent to remember that past behavior predicts future behavior. Certainly contact the past landlord about past behavior of the prospect and any problems there may have been.
When advertising for tenants, your real estate agent will be sure that the language of the ad is in compliance with all fair housing guidelines. If you are not using a real estate agent, be sure to check with your lawyer as to the proper language.
To read the rest of this column, click here. Bill Primavera is a Realtor® associated with William Raveis Real Estate and Founder of Primavera Public Relations, Inc. (www.PrimaveraPR.com). His real estate site is www.PrimaveraRealEstate.com, and his blog iswww.TheHomeGuru.com. To engage the services of The Home Guru to market your home for sale, call (914) 522-2076.
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