Expectations of a New Home With a New Rental Unit
August 15, 2014 - By Maurice Saab - Global Media Buzz
Buying a home with a rental unit can be a good way to subsidize the high cost of housing. It's also a great way to age prematurely and deplete your savings account faster than you expected.
Before you forge ahead into the dual role of home owner and land lord; please do yourself a favor and get a damn good attorney and please do ask the right questions, including these:
- Is the rental apartment legal? Check the building's certificate of occupancy. If the rental unit is not legal, you will have trouble getting financing and you wouldn't be able to legitimately rent out the apartment.
- Is the seller exaggerating the rent? Get a copy of the lease or leases and have your lawyer review the terms. Be clear on the termination date(s).
- Is the apartment rent regulated? Such as is the rent stabilized, if so tenants have the rights to renew their lease, and you can raise the rent by only a certain percentage points.
You should always meet the tenants before they sign the lease or move in; because you will be living in the same small, quite, possibly un-soundproofed building.
Will you depend too much on steady rental income? In a tenant-friendly housing court, it can easily take a year to evict a nonpaying tenant. Make sure you have got the cash to float you through a nightmare scenario like that.
If you are ready to be a landlord, you should know or be a good handyman. Decide if you 've got the stamina for 3 A.M phone calls about plumbing emergencies, no heat, broken stove or refrigerator, water leaks, broken doorknob, and broken window glass etc.
If you can answer "yes" then you have my sincere good wishes to you and good luck.