Renting the guest house
Experts say do your research on Clark County landlord laws, set rules up front before lease
With a little extra space in your home and a lot of extra space in your wallet, renting out your mother-in-law suite or guest home could help cover your mortgage — if you’re up for it.
Welcoming a tenant into your personal space is a lifestyle change that shouldn’t be taken lightly.
Are you willing to share space? Consider how you feel about sharing areas and amenities with a new tenant. The most common issues arise in the most common spaces:
■ Kitchen: Will you eat meals together or separately? Will you cook at different times? Where will you keep your food and will you share food? Do you want to set rules about dirty dishes?
■ Laundry facilities. Are you constantly washing clothes for a family of five or can you hammer out all your laundry in one night? Do you want to schedule usage times or be more free-flowing about it?
■ Parking: Are you willing to share the garage? Do the tenants need to park in the driveway? If they park in the driveway will they block your car?
“In the case of a mother-in-law suite, or detached guest home, the lease should detail how and when the shared living space like a family room, media room or kitchen should be used,” Kami Zargari, owner of Triumph Property Management, said.
Do you mind sharing the pool and the game room? Decide whether you want to offer those amenities to tenants or keep them as your private space.
You’re ready to share your space, make accommodations and welcome tenants into your home. Where do you start?
Ensure that you’re allowed to rent out space in your home. Nevada has nearly 3,000 homeowners associations, so odds are good that your rental will fall under legally binding covenants, conditions and restrictions in your neighborhood. These CC and R’s might restrict your ability to rent or even limit the number of people allowed in one home. While you’re at it, make sure your home is up to Clark County code.
What is your space worth? Free-standing one-bedroom apartments average about $800 a month valleywide, but, like all real estate, that varies according to location. Expect to make less than the average rent for an apartment in your area. The draw for renters to live in someone’s home or guest home is that rent is cheaper. Zargari said average rates for a one-bedroom apartment in a home are $450 to $650 a month.
Sites like rentometer.com and rentjungle.com will show you what comparable rates are in your area.
Next, determine which matters more to you: time or money. If you spend money on a property management company, it will advertise, do the paperwork, arrange for repairs, handle money, address tax issues and, if necessary, help with evictions. If you skip the property managers, you save their fee, but you must invest your time.
“An effective property management company will free up the owner’s time and enable them to focus on their lives, … rath- er than the day-to-day responsibilities of managing a property,” Zargari said.
He also warns that regardless of whether your new tenant is a friend, family or stranger, take the standard precautions: check references, background, credit report and job history.
“Sometimes it may seem easy to rent to a friend or family member, when it’s possible that they might take advantage of your personal connection with them,” he said.
Setting lease terms is essential when sharing space in a home with a tenant. Consider that if you’re renting to a friend or family member that a lease is still necessary. It’s the (almost) final word in a dispute. Set rules on: ■ Guests: How many guests at one time is OK and for how long? Set a boundary even if you’re willing to be flexible.
■ Pets: What animals are OK? Consider limiting the number and type. Check with your homeowners insurance to see whether animals affect your rates. Clark County code allows up to three dogs and three cats in a home without a permit.
■ Utilities: How and when will utilities be paid? Will they pay a set amount each month; will it be included in the rent; or will it be a percentage of the total bill?
■ Access: Write what amenities the tenant has access to – such as the pool, the washer and dryer, the theater room and if there is a set time or if they are available 24 hours a day. Be specific; these written rules are what you and the renter can turn to when an issue arises.
Be careful. Read up on Nevada Revised Statute 118A, which governs tenant contracts and be sure not to accidentally run afoul of tenants’ rights. For example, you can’t:
1. Charge more than three months rent as a security deposit (and you must provide a written receipt);
2. Enter the tenant’s space without 24hour notice
3. Withhold a security deposit more than 30 days after a renter vacates
It might be best to use a template lease (or one provided by your property man- agement company) and tailor it to fit your needs. But, be careful you don’t add or delete anything that is covered by state law. A sample lease agreement can be found at rentalleaseagreement.org/nv/.
And don’t forget — Uncle Sam wants in, too. All rental income is taxable, but that can be offset by the costs of repairs, upgrades and upkeep.