Switching Primary Residence to a Rental Property

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Switching Primary Residence to a Rental Property

Sheila Grullon
New to Real Estate · Florida and NYC · Member since 2019 · 10 posts · 3 votes

Hello BiggerPockets Community,

I'm looking for some advice on how to transition from home owner to investor. I currently own a 1br condo in Fort Lauderdale, Fl. I have been back and forth from NYC to FL and looking to move back to NY permanently. That said, I'd like to rent out my condo. AirBnB would be my preference but my HOA won't allow it. So, I'm looking for some direction/ steps to transition it from a residential property to a rental. Do I need to change my property insurance? What's the best way to get a lease agreement? What should I include or look out for? I know this will change my homestead so are there other tax related things I should look out for? I'm a little lost on the logistics and now that I'll be diving into investor territory I want to get it right.

I'm sure the answers are out here on the internet somewhere (which I'm willing to research myself) but I figured I would ask for advice from experts in the field. 

I'm also considering selling altogether to invest my money in Philadelphia or house hack in NYC but those are completely different beasts for a separate post. 

Any advice or direction to some online resources would be greatly appreciated.

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  • Andrew Pope
    Insurance Agent · Albany, NY · Member since 2020 · 32 posts · 21 votes
    6y

    I can answer the question about your property insurance since I'm an insurance agent here in NY.

    Yes, you will need to update your property insurance. Contact the agent who sold you your current policy and let them know of your plans. You will need a landlord policy. They tend to be more expensive than a typical homeowner/condo policy but, if there was a claim and you have the wrong policy, than that is even more expensive lol.

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  • Nicolas Biangel
    Specialist · covington, GA · Member since 2019 · 61 posts · 15 votes
    6y

    In regards to the insurance, it'll be a DP3 coverage.  

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  • Sheila Grullon
    OP
    New to Real Estate · Florida and NYC · Member since 2019 · 10 posts · 3 votes
    6y
    Originally posted by @Andrew Pope:

    I can answer the question about your property insurance since I'm an insurance agent here in NY.

    Yes, you will need to update your property insurance. Contact the agent who sold you your current policy and let them know of your plans. You will need a landlord policy. They tend to be more expensive than a typical homeowner/condo policy but, if there was a claim and you have the wrong policy, than that is even more expensive lol.

    Thanks so much for your reply. I will definitely be in contact with my insurance company. 

    0Reply
  • Sheila Grullon
    OP
    New to Real Estate · Florida and NYC · Member since 2019 · 10 posts · 3 votes
    6y
    Originally posted by @Nicolas Biangel:

    In regards to the insurance, it'll be a DP3 coverage.  

    Great! Will look into DP3 coverage. I'm hoping it will be a smooth transition and it won't eat up too much of my cash flow since that's already a little on the low side.  

    1Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    6y

    @Sheila Grullon welcome to BP.

    The basics are pretty simple. Place an add for your property, Screen the tenant, sign a lease, give them the keys. (notice the emphasis on screening the tenant.)

    However there are many details. Are you going to use a property manager? Are there any rental licenses required?

    I am sure there are leases in the FilePlace. They have moved the link so you will have to search for it here. The documents in the FilePlace vary tremendously in quality. Also you may be able to get one from an agent or tenant placement service. Also a good real estate lawyer can also provide you with one.

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  • Kevin Koffman
    Investor · Fort Lauderdale, FL · Member since 2016 · 22 posts · 15 votes
    6y

    You will need to get a blank application from your condo association, they usually want their own form filled out by tenant.

    - Place an add, Zillow or with a R/E agent

    - have tenant fill out associations’ condo application and Your background authorization form

    - get app/background fee from tenant 

    - Screen the tenant, (full background check)  If you approve them:

    - get cashier check or money order for  at least 1 mo rent as a deposit to hold property and sign a lease. 
    - submit application and lease to condo association 

    - get condo association approval of tenant in writing (email is fine)

    - get remaining $$ (last & security)
    - give them the keys.

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  • Eddy RamosPro Member
    Fort Lauderdale, FL · Member since 2015 · 27 posts · 8 votes
    6y

    @Sheila Grullon feel free to message me. You said that you would be interested/entertain selling. If so, let’s see what we can workout.

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  • Sheila Grullon
    OP
    New to Real Estate · Florida and NYC · Member since 2019 · 10 posts · 3 votes
    6y
    Originally posted by @Kevin Koffman:

    You will need to get a blank application from your condo association, they usually want their own form filled out by tenant.

    - Place an add, Zillow or with a R/E agent

    - have tenant fill out associations’ condo application and Your background authorization form

    - get app/background fee from tenant 

    - Screen the tenant, (full background check)  If you approve them:

    - get cashier check or money order for  at least 1 mo rent as a deposit to hold property and sign a lease. 
    - submit application and lease to condo association 

    - get condo association approval of tenant in writing (email is fine)

    - get remaining $$ (last & security)
    - give them the keys.

    Thank you so much for this detailed break down. This helps a lot since I wasn't sure in which order to do certain things. I also had a question about how much I should ask for as a deposit. I know in my past experience as a renter in NYC I paid first month, last month and security. It seems that's still the case in Fort Lauderdale based on your reply. Thanks again!

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  • Kevin Koffman
    Investor · Fort Lauderdale, FL · Member since 2016 · 22 posts · 15 votes
    6y

    Depends on your place. On an older unit that is at the low end of the rental market, I get first and security. 2 months rent.

    On a higher end beach front place, I get first, last and security. And demand a high credit score. 
    when a recent tenant applied to the beach place with F/L/S but had a non-existing credit score, I turned them down. They came back and offered 2 extra months of pre-paid rent and had an excellent rental reference from the previous landlord. I accepted. 

    If it was my previous home, as in your situation, I would definitely get F/L/S and I would want to see a 700+ credit score. 

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  • Sheila Grullon
    OP
    New to Real Estate · Florida and NYC · Member since 2019 · 10 posts · 3 votes
    6y
    Originally posted by @Kevin Koffman:

    Depends on your place. On an older unit that is at the low end of the rental market, I get first and security. 2 months rent.

    On a higher end beach front place, I get first, last and security. And demand a high credit score. 
    when a recent tenant applied to the beach place with F/L/S but had a non-existing credit score, I turned them down. They came back and offered 2 extra months of pre-paid rent and had an excellent rental reference from the previous landlord. I accepted. 

    If it was my previous home, as in your situation, I would definitely get F/L/S and I would want to see a 700+ credit score. 

     Good to know! It is an older building (courtyard style built in the 70s) but I've made some updates to the unit. The location is what really provides the value as it's a couple of miles from the beach, walking distance to shopping and restaurants and smack in the middle of FLL airport and Las Olas. I've am also considering selling to invest elsewhere but it might be worth sitting on it for a few more years. 

    Any other tips on Fort Lauderdale specific rental market is always appreciated. 

    Thanks!

    0Reply
  • Kevin Koffman
    Investor · Fort Lauderdale, FL · Member since 2016 · 22 posts · 15 votes
    6y

    "Selling it to invest elsewhere"... Assuming you're selling it to get the equity out. You don't necessarily have to sell it, Re-finance it. BRRR.
    Get super low interest rates and use that money to buy another investment. Grow your assets AND sit on it for a few more years. Do both. 

    0Reply
  • Sheila Grullon
    OP
    New to Real Estate · Florida and NYC · Member since 2019 · 10 posts · 3 votes
    6y

    @Kevin Koffman This was my initial plan but I was told refinancing "might not be worth it" because of the amount of equity available isn't much. I might need a second opinion or maybe get more detailed advice from people like you and others on BP who know the endless possibilities available to investors. 

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