If you play your cards right being a luxury homeowner can be a fruitful experience and a good way to make some money through renting out your property.
However, no one wants a tenant that defaults in payments or causes other problems, so it is important to do your homework before renting out your luxury home.
The sales of luxury homes across the US have been hitting records in the past few years and prices for luxury real estate have also increased significantly, according to Investopedia. This indicates a higher return for luxury homeowners who are planning to turn their homes into a rental and become landlords to ridge things out.
The benefits are plentiful but it’s possible for this action to create a problem that offsets the advantages when important considerations aren’t made.
Here are a few considerations that will help you march in the right direction:
Condition of your home
Before renting out your property you must ensure that it complies with the tenant’s expectation; it should include appliances, electrical wiring, gas pipes, heating and ventilation, etc. in good working condition.
If your home looks like it offers luxury and has been well looked after it is likely that the tenants will treat it as their own. It may also mean that after the lease/tenancy period, the property will be in a good working condition as you left it.
Many landlords are unaware that they are strutting around with the words ‘file a lawsuit against me’ tattooed on their heads! You could be a high-profile target in legal circles because you run your rental property endeavour in a lax manner with little regard to how you’re perceived by the tenant and potential adversaries. As a result, you need to consider a well-designed insurance policy to protect your property from losses caused by perils, including burglary, vandalism, and storms.
A policy will provide liability insurance, also known as CGL. It is best to look into requesting general liability insurance quotes when dealing with your own investment. This will ensure that you receive the best possible price without being skimped on the coverage. This insurance will cover losses or injuries caused to others because of defective conditions in your home. Such a policy would also protect you against damage caused to rented premises, which will protect your property’s value in case you decide to sell it after the tenancy period.
Renting out your luxury property may look simple, but it’s important to consult a professional to ensure you’re abiding by property rules and tax laws because of the new status. Specifically, the laws in most countries require you to report rental income on your tax returns, so proper information will enlighten you about expenses that are deductible, and whether you qualify for tax deductions.
An attorney could also help you understand landlord-tenant laws (they vary in case of luxury homes) and rules regarding luxury property rentals. You can also draft a lease with the help of an attorney – just make sure it’s in compliance with the local laws. Lastly, a professional can assist you in determining emergency contacts and suitable housing rules. You may find attorneys gathering references for potential tenants for screening purposes, as well.
Renting a house has numerous benefits – but only if you time to address the potential nuisances associated with the rental. After all, it will still remain your property.