Landlord Tips: Turn your Home into a Rental Property

Many Filipinos can’t still afford to buy their own home due to minimal income and poverty. Others rent properties to get closer to their workplace or tourist destinations. That is why you can find a plethora of rental properties spreading all over the country to supply the needs of the rental market. To ensure tenants are protected, the government created a law that controls rental costs called the Rent Control Act of 2009.

According to the Rental Law of the Philippines, this act covers monthly collecting rent up to P10,000. Landlords can collect one (1) month advance and two (2) months' deposit. Rental properties with below P5,000 monthly rent can increase up to 2 percent yearly rent. Properties with rent between P5,001 to P8,999 monthly can increase up to 7 percent, while houses with P9,000 to P10, 000 can only raise the rent to 11 percent. Property owners who don’t follow the rental law are subject to punishment by a fine or imprisonment at the discretion of the court.

So, if you have purchased an apartment, condo, or a house and lot in the Philippines for a rental business, make sure you study and learn these landlord tips.

5 Tips on How to Convert your Home into A Rental Business

The best thing about real estate purchases is that you can earn from them. Apart from selling your home, you can turn it into a rental property. Thus, it can even cover payments for your amortization and maintenance costs.

Whether it is a luxury condo or an affordable house and lot unit, these are the things you need to consider in converting your property to a rental business.

1. Understand the Role of Homeowners’ Association

First things first. You must fully understand the implementing rules and regulations of the Homeowners Association (HOA). It’s a non-stock and non-profit organization registered by Housing and Land Use Regulatory Board (HLURB).

Although it is not mandatory, all homeowners are encouraged to apply to fully enjoy the benefits of the residential community, especially for condo and apartment owners. 

An HOA member must pay the membership fee, special assessments, and dues to avail of all community services and facilities. The role of HOA also includes if a property is allowed for lease and protection policies for landlord and tenant, including renters insurance.   

2.Get Ready with your Documents

Once you reviewed the HOA rules and it is possible to rent out your unit, get ready with your documents as a landlord. You must create a standard lease form, such as a contract for a lease or lease agreement. This agreement must be concise, including lease duration, monthly rent payments, terms, and security deposits.

Part of the rental agreement must state the grounds for eviction reports and renewal of the contract, especially for responsible tenants.

3. Determine the Right Rental Price

Revisit the rental law first and look around. Check out some properties in your location similar to yours and compare pricing. Then, evaluate your property to see which of these have the same features to adjust the right rent price. 

You can also look at various online rental companies or property listings websites offering rentals. 

4. Consider Minor Home Upgrades

Modifying your home increase the price of your rent and makes it attractive for quality tenants. But, this is only required if your home needs fixes, such as broken faucets, dilapidated ceilings, etc. However, if your home is brand new and offers a livable space, you can simply add minor upgrades, such as installing home accessories and decors.

Note that home modification is only optional if you have an extra budget.

5. Prepare for Associated Costs as a Rental Property

Aside from HOA dues and fees, you are obliged to pay for tax registration, the cost of marketing your property, and home upgrades. Over time, you will have to shoulder the repair and maintenance costs of your property to sustain its livability.

Otherwise, it will affect your rental price, or no one will be interested in renting your home.

How to Save Money in Buying a Home for a Rental Business

If you’re considering to buy a property for rental purposes, there are several factors to consider to save money on the investment.

• Keep in mind that you’re a business owner.

You are not only a property owner; you are also doing business. Therefore, don't just buy because you love to live in that unit. Instead, ask yourself if this home is attractive enough to capture a potential tenant. You can’t simply put a price on it if it’s not reasonable for them.

• Take a smaller risk.  

This is especially true for first-time landlords. And, one of the best rental business ideas is to purchase an affordable house and lot for sale or budget-friendly condo units. From there, you will have first-hand experience with how rental businesses work and re-assess if this is the right opportunity for you. 

• Be ready to get your hands dirty.

One of the best things to save money is to have certain skills, especially in repair and maintenance. You don’t have to spend on paying professional fees for plumbers and electricians if you have that skills. Of course, you need to be well-experienced and properly trained by experts before getting your hands dirty.

• Seek help from a professional property manager.

If you think being a landlord is too much to handle, you can always get professional help from a property manager or real estate agents. As a real estate investor, you can always hand over responsibilities like drafting the lease agreement to ensure that the rental law is followed. 

Aim to Please Your Tenants with Affordable Living

Being a landlord is also a huge responsibility. You must also treat your tenant as a family member. So, find a property that fits your budget and is sustainable and livable.

That is why Lumina Homes offers a residential community with a good location and complete amenities that every homeowner and tenant can enjoy. With more than 50 key locations nationwide, rest assured, there is one right property suitable to please your future tenants.

Contact our accredited sellers today or message us through our chatbox.