Want to Be a Landlord?
I am often asked by homeowners whether it's worthwhile to rent their homes. I hear, "Isn't it a lot of trouble to rent in DC?" Well, it's not particularly simple. Real estate is still one of the best returns on investment and it can be done in the District; it just has to be done right. Here's what you need to know when it comes to being a successful landlord:
Determine What Type of Licensing You Need for Your Particular Type of Rental
No matter what, you'll need a Basic Business Licence (BBL). A single-family home or condo requires a one-family license while a two-unit property like an English basement requires a two-family license. You'll also need a Certificate of Occupancy. The city will do an inspection of your home in order to make sure that everything is up to code before issuing any licenses. The good news is that most of this can be done online nowadays.
Decide if you want to use a Realtor and/or a Property Management Company
For one's month's rent, a Realtor or property management company can advertise and show your property, check a potential tenant's rental and credit history, and draw up and negotiate the terms of the lease. A Realtor can also help you figure out how much to charge based on comparable properties for rent in your specific marketplace. If you decide to employ a property management company on an ongoing basis, they will collect the rent and deal with maintenance issues for a monthly percentage of the rent being charged. In this area, that ranges from seven to ten percent. You will, of course, still have to pay the contractors once the maintenance has been scheduled.
If you decide to go it alone, you will have to take care of these steps yourself. It's a good idea to go online to see what's for rent in your neighborhood to set a good price. You don't want to overprice your rental as an empty rental property doesn't do you much good and you still have to keep making those mortgage payments. Then you'll want to advertise your listing. Craigslist can still be a good way to find tenants, but there are a number of other online advertising spaces. Finally, make sure you vet your tenants but still comply with DC's Fair Housing Laws. You can and should check up on a potential tenant's employment status, rental history, and credit history. Pro-tip: if you decide to list with me, I will take care of all of that for you!
Be Prepared for the Inevitable
Something is going to break or wear out eventually. A home warranty could be a good way to cover your appliances and systems. but take into consideration that home warranty companies often have much longer wait times to get a service person out to your home. You should also have some money set aside for preventative maintenance and any repairs that may not be covered by your homeowner's insurance. It may be worthwhile to require your tenant to purchase a renter's insurance policy to further protect the tenant and your home.
Just like with a home purchase, do a final walk-through of the property before your tenant moves in. Take pictures and encourage your tenant to take pictures to make sure that you're on the same page when it comes to the property's condition at the time of rental. That way, should any damage that wouldn't be considered normal wear-and-tear occur, you will be able to back up your claim that payment for the repair should come from the tenant's security deposit.
Call Me If You Have Any Questions
Whether or not you decide to use a Realtor to list your rental property or if you're unsure if you even want to rent in the first place, I am happy to help you make those decisions based on my expert knowledge of the market. Don't hesitate to call me or shoot me an email with any questions you may have.
Flashback Friday
*Courtesy of Streets of Washington
Now a very large office building, the Richmond Hotel graced the northeast corner of 17th and H Streets Northwest until it was torn down in 1922. Click on the photo to see what it looks like now!
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