Before you buy an investment property in Providence, it’s important to know what you can and cannot do with it after the purchase. Here are some rental restrictions you should be aware of before you buy an investment property in Providence.
Buying investment real estate is one of the best ways to generate wealth. That said, you don’t want to buy a property and later find out that you are not able to do with it what you want. Buyer’s remorse can kick in quickly when you purchase a property that doesn’t turn out to be what you are expecting. In some cases, you may not be able to rent out the house at all! It’s important to do your research before buying an investment property in Providence. Once your homework has been completed, investing in Providence may be one of the best financial decisions you can make!
Can You Rent It Out Legally?
If you purchased the house using an FHA loan, there are a few restrictions on when you will be able to rent out the property. With an FHA loan, you’ll be required to live in the property yourself, either in one of the rooms of the home or in one of the units if you purchase a multi-family property. This is actually a great strategy many investors use when starting their portfolios. Using an FHA loan you can buy a house of up to 4 units, living in one of those units yourself is a great way to have your tenants pay off your mortgage while having free room and board.
Buying a house within an HOA can also limit your ability to rent out the property. There may be rules and regulations imposed by the association which limits your ability to rent or will set specific requirements your tenants must meet before renting the home out to you.
When Can You Enter The Enter The Property?
You likely know that when you have tenants living in your home, you can’t just barge in as you see fit. You’ll need to give notice ahead of your planned visit along with a valid reason why you need to enter the property. Things like repiars, annual inspections, and other maintenance-related issues can require you to enter the property. Your tenants should be well-screened and hopefully receptive to your needs to enter the home. As a landlord, you need to be respectful of their privacy.
What Should You Know About Fair-Housing?
Before buying any investment property in Providence, you’ll need to be well-versed in all of the fair-housing laws. These laws state you cannot make your house unavailable to anyone because of race, color, religion, sex, handicap, familial status, or national origin. Violating one of these laws can result in severe fines and penalties. The first penalty is in the 10’s of thousands of dollars and with more violations, the dollar amounts go up from there.
How Many People Can Live There?
In every city and in every state, there are laws regarding occupancy. Typically, there are local laws that dictate a per bedroom maximum. You can also limit the wear and tear on your property by limiting this number yourself. The house may have a small common area or older plumbing that won’t be able to keep up with a large number of people living in the home. Be sure to inform your potential residency limits before they apply to rent. You’ll have angry people on your hands if they go through the entire application process only to find that the property isn’t large enough for their family.
What Can’t You Put In The Lease?
When drafting your lease, there are things you will need to include such as the amount of the rent, lease terms, and consequences of doing something to break the lease. That said, there are a number of things you cannot include in the lease such as asking the tenants to be responsible for the repairs or making their security-deposit non-refundable. Of course, if the tenant is responsible for damage to the home, they will be on the hook for the repair bills which are hopefully covered by the security deposit.
When buying an investment property it is best to review the laws for your specific area so you know exactly what you can and can’t do. If you are in an area with an HOA, the rules about renting can become even more strict. If you are thinking about buying an investment property in Providence, not only can we help you find the perfect property, but we can also help to ensure you are aware of all of the rental restrictions imposed on your property.