Are you thinking about purchasing a condo unit as a long-term property investment? Or maybe you’re waiting for your property to mature before listing it for sale? Whichever situation you are in, consider converting your newly acquired condo unit into a rental property. It can be a profitable venture that can utilize your idle property and cover your overhead costs.
It’s undeniable that there is a real estate boom. With the surge of IT-BPO companies in the country and the rise of Philippines Offshore Gaming Operators (POGO) industry, the country is seeing a rise in demand for properties, both for office and residential spaces. The demand is further bolstered by the current administration’s Build, Build, Build (BBB) Program, consisting of 75 flagship infrastructures across the country. As of Q3 2018, the nationwide residential real estate price index rose by 4.4% with a 6.8% residential property price increase in the National Capital Region. In terms of online searches, Quezon City was the topmost searched city for residential properties, but for condos for rent, Makati had larger figures.
As this outlook continues, now is the opportunity to capitalize on your unit. With that said, keep in mind that transforming your condo unit into a rental property doesn’t happen overnight. Below are the steps you need to take to ensure that you are fully prepared and maximize your gains from renting out your unit.
Preliminary Preparations Checklist
Review your condominium rules and regulations
Before you get started, make sure to review these rules and bylaws of your condominium association to confirm if renting is permitted. Keep in mind that condominium associations may have rules and restrictions that can affect your rental property. So it is advisable to consult with the association president in case there are new or revised regulations for leasing.
Research laws and local ordinances
Do your homework and familiarize yourself with the laws and local ordinances that will make it easier for you to brief possible tenants and avoid trouble. Republic Act No. 9653, known as the Rent Control Act of 2009, will protect both you and your renter. Knowing the Rent Control Act is vital because it will protect lessors from having their business compromised by errant tenants, as well as lessees from exploitative practices committed by unreasonable landlords. Aside from this, there may be local ordinances regarding resident behavior and public order, such as noise bans.
Secure permits and paperwork
Unless you plan on making property rentals into an official business, the law does not require any permit to rent out properties. However, depending on the bylaws of the building owner, you may need to secure certain permits and relevant paperwork. To be safe, consult with your condo’s association for the requirements.
Update insurance coverage
You may already have property insurance on your condo unit, but this may only cover owner-occupied units. Upgrading to a package with a “dwelling policy” is recommended to provide protection for the property and your tenants. Consider availing liability coverage in the event someone is injured on your property and loss of rent due to damages as well.
How to Prepare Your Condo Unit for Renting
- Research your market
Getting a feel for the adjacent establishments and overall location of your property will help you get a better grasp of what is accessible for future tenants. Additionally, asking the developers for the starting prices of the condos for sale and market segments in the area can also give you an idea of what kind of people would be interested in your property.
- Make repairs and upgrades
Conduct a thorough inspection of the unit to evaluate the state of its systems and structures. If needed, repair any damages and replace any faulty, worn, or stained fixtures. Adding a fresh coat of paint and minor furnishings and decor can also add more value to your property and make it look more attractive.
- Decide on your price point
Before anything, it’s good to know the historical prices from the developers, as well as the latest average rental rate in the area. From there, your price point should take the following into consideration: association dues, taxes, maintaining costs. If you’re still paying the monthly mortgage on your unit, this also needs to be factored into the final cost. Take note that while fully-furnished units are priced higher, more affordable units are quicker to rent out.
- Create your listing
The key to creating a good listing is to provide all the information your prospects may need: number of rooms, amenities, nearby establishments, landmarks, and commuting terminals. Aside from this, it’s important to have clear and attractive photos that fully show the unit with your listing to catch the eye of possible renters.
- Advertise your property
With the rise of the internet and social media, advertising your property can be done through various online platforms and websites. Traditional methods like newspaper ads and flyers can also help attract niche demographics like students, commuting workers, and the like.
- Prepare a Lease
To rent out your unit, you’ll need the following documents: Proof of Ownership, the Official Receipt and Tax Registration, and a list of inclusions as an annex to the contract. Your lease agreement should contain the following details: the duration of the lease, terms of rental, terms of the security deposit, responsibilities, and regulations. This legally protects you and your tenant and makes the agreement clear to both parties.
- Screen potential tenants
Renting out your property to others carries a certain amount of risk. Part of mitigating that risk is screening potential tenants. Do a background check and if possible, ask subtle but polite questions when meeting with them. An ideal tenant not only has the means to pay their monthly rent on time, but also treats the unit as if it were their own.
- Consider hiring a property manager
If the unit isn’t close to your own home or if you don’t have the time to be fully hands-on with the rental process, you may want to consider hiring a property manager. While this may be an additional cost, having a property manager can remove the burden of having to handle your tenant’s concerns personally.
Turn Your Condo into a Rental Property
With this knowledge, all that’s left is to get the ball rolling. Through Property Access, you can find condo unit listings that are perfect for income-generating properties. If you already have a property, advertise your rental listings and find the perfect tenant for your condo.