Accidental Landlords: How to Make Money From a Rental Property

Accidental Landlords: How to Make Money From a Rental Property

About 20% of households receive inheritances and some of those inheritances come with homes. Inheriting homes is common and leads to a lot of accidental landlords.

As the housing market shifts, homeowners may decide that selling a home, whether they inherited it or not, is not worth it. If you are an accidental landlord, keep reading to learn how you can make money from a rental property.

What Are Accidental Landlords?

Accidental landlords are those that get into the property business, not by choice. Homeowners may have few options when it comes to selling their home so they choose to rent it out.

Selling a home is not always as easy as it sounds. Market conditions can affect how much you can sell your home for. Instead of continuing to pay the mortgage when you don't live in the home, turn it into a rental property.

Individuals that inherit homes may also choose to rent out their property instead of selling it.

Changing Your Mortgage

Before you can start making money from your rental property, you need to contact your mortgage lender and make them aware of your situation.

A lender can grant you a Consent to Let short-term solution that allows you to let your property for up to 12 months while maintaining the current mortgage.

This is the best solution if you think the local market will improve within the year, and allow you to sell your home for a profit. However, a lender doesn't have to grant you Consent to Let.

For a more long-term solution, you can switch your residential mortgage to a Buy to Let mortgage. If you have enough equity in your home, you can also consider a Let to Buy mortgage.

Buy to Let Mortgages

Buy to Let mortgages are more common and straightforward options for an accidental landlord. A new landlord should have a minimum salary to qualify for this type of mortgage, typically up to $25,000.

It's important to note that interest rates are higher on these mortgages compared to traditional residential mortgages. Arrangement fees can be higher than conventional mortgages as well.

Income Tax and Insurance

Once you start making money from your rental property, you'll need to pay income tax on the rental income you reap.

Standard home insurance isn't enough for a rental property, so you'll want to contact your insurer or financial advisor about your situation. You can also hire rental property management services that can handle taxes and insurance for you.

Landlord insurance will cover you for the following:

  • Loss of rent
  • Malicious damage
  • Property damage

Full-service property management will ensure your needs are covered as an accidental landlord.

Make Money as an Accidental Landlord

The market isn't always in the best condition to sell a home. Whether you own your home or inherited it, you can make money as an accidental landlord by renting out your property.

Our property management team is trained to help accident landlords make the most of their situation. Contact us today to start making rental income.

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