Turning Sellers into Landlords--What Homeowners Need to Know About Managing Their Property

As we continue to navigate through this uncertain real estate market we see a new trend taking hold--sellers are now taking on the role of landlords.  Owners who have been unsuccessful in selling their property and need to move for personal reasons, or employment opportunities are now trying to rent out their homes.  With the plethora of short sales and foreclosures out there, rental properties are drawing people from all walks of life and financial status.  As a homeowner without property management experience, are you ready to take on the demands of what is required?  Do you know what is required in your state, city or town?
 
Most homeowners are not equipped to comfortably switch roles from homeowner to landlord.  Most homeowners believe that if they hire a real estate agent to list their property in the MLS and a renter is found then all is well and the story closes.  It's just not that easy.  In fact let's take a look at the responsibilities of both the homeowner involved in the rental.

Homeowners' Responsibility
 
Make sure your mortgage is paid-to-date.  This is very important.  If you are renting the property because you can no longer afford the mortgage payments then make sure that the rent you are charging will cover the mortgage payment.  Of course you will also have to keep the rental price in alignment with the current rental prices in your area.  It is always wise to seek the help of a real estate professional.  They will pull up statistics much like they would for a market analysis.  Or if you would like to go it alone without the help of a professional then check out the rental properties online.  Keep in mind that rental prices vary in different locations.
 
Make sure your homeowner association dues are paid up-to-date.  This is extremely important.  You can be current on your mortgage payments but if you have been neglect in making payments to your homeowner association your property still stands the risk of being foreclosed on.
 
How will you market your home?  Pictures?  Flyers?  Ads?  Online advertising is key.  Your rental property needs to have online exposure.  Gone are the days when you could capture your target audience in a local newspaper ad.  Most people are searching for properties on the Internet from the comfort of their homes.  Remember to upload pictures of the rental online.
 
Make sure you understand what Laws and Regulations are in place for landlords in your state.  (Click here for more information within the state of Illinois for the PDF format of the "Practical Guide for Landlords in Illinois.") There you will find current information on lead-based paint, eviction laws, tenant violation of lease agreement, carbon monoxide and smoke detectors laws, and The Illinois Human Rights Act/Fair Housing Act just to name a few.

In addition, landlords need to be familiar with the municipal licensing and inspection programs in your area.  They differ by village, towns and cities but all are governed by Illinois State Law.  Please note that as of January 1, 2012, it is unlawful for landlords, property managers or licensed agents to charge consumers more that their costs to pull credit reports or background checks.
 
In my professional opinion if you are thinking about renting out your property and you are too busy with your career, job and family responsibilities or you are moving out of state and not able to handle the property management side of homeownership, then you should seek the aid of a real estate professional to manage the property for you. Bear in mind that not all REALTORS® are property managers.  This is specialty area and you would be wise to seek out the help of someone who specializes in property management.