Primary residence to rental

7 Replies

Hello BP!

Mt first rental property is a primary home I moved out of a few months ago. It sat on the market for quite a while. The market for rentals seems to be pretty good.  What changes do I need to make (insurance, loan stuff.) Who do I contact to make my operation legit?

The property is in Nebraska- if that makes any difference.

I appreciate any  insight!

Megan

As far as the insurance go, I would call your insurance agent. Also, it may be a good idea to require your tenants to have a renters insurance.

Regarding to the loan, I don't think you need to do anything.

Thanks Soh. I will do that. 

@Megan Spargo my experience fits what @Soh Tanaka said- Tell your insurance company because (mine told me) they will likely not cover anything that happens under the wrong kind of policy (owner occupied versus renter occupied, for example). Your payments will probably go down because your new policy will only cover the structure. If the renter wants their belongings protected they have to get their own insurance (I also recommend requiring it).

You don't have to tell your lender and I wouldn't. There is nothing improper about moving out of a home you originally bought as a primary residence and, hooray!, you have a lower interest rate on your loan than you would if you had bought it as a rental property (househacking!). Just keep that in mind if you consider refinancing - unless you move back in you would likely have to refinance at a significantly higher rate :)

Awesome! That's great if my rates go down!

Thanks Madeline

@Megan Spargo

Like others have said your insurance will change.  Decide if you will self manage or hire this out.  After you decide if you are going to self manage then your homework begins of creating a good lease.   Some have lawyers write up one for you.  Make sure your read the Landlord-Tenant Laws so you know what you can or cant do.  Here are some resources for you.

http://www.nrec.ne.gov/legal/landlordacttoc.html

https://www.biggerpockets.com/renewsblog/2013/01/04/how-to-rent-your-house/

https://rentallease.net/nebraska/

https://www.tenantbackgroundsearch.com/

Thanks Jim! I am working with a lawyer who is also a real estate investor. She has helped me with a lease.

I actually did already have a tenant in who is moving out- I have another one lined up. Before my last tenant, I had a lease and I called references, however, I learned that income verification is important. Any suggestion on how to do that? Do look at pay stubs, or contracts?

I have been self-managing, I would be happy to pass that off.

Thanks for the resources. I will be checking them out.

Originally posted by @Megan Spargo :

Thanks Jim! I am working with a lawyer who is also a real estate investor. She has helped me with a lease.

I actually did already have a tenant in who is moving out- I have another one lined up. Before my last tenant, I had a lease and I called references, however, I learned that income verification is important. Any suggestion on how to do that? Do look at pay stubs, or contracts?

I have been self-managing, I would be happy to pass that off.

Thanks for the resources. I will be checking them out.

I would ask for 2 paystubs.   If they own a business then ask for tax returns.

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