Today on Dear Claire we’ll be discussing were talking about rentals and how you rent out your primary residence.
Say I saved, got all my money together, bought my first house, then I met somebody and decided that we needed more space – so we want to move in together at a new place. I don’t want to sell my house, and I want to rent it. This is totally fine – no big deal. The lender does need notification as long as you were planning on living there originally. Things can change and you do not need to contact the lender in this instance.
Next you need to notify your lender that there is a change in address so your documentation associated with your current property is changed to the new property. It’s important to get associated documents like property tax, escrow statements from your lender.
Another thing to change is your insurance. Liability insurance is generally meant to protect you from when you invite somebody over, they trip and fall and they sue you. That’s basically what your liability insurance is for. The liability for the lender and for the insurance company changes significantly if you now your property is a rental. So call your insurance company and tell them that you’re making it into a rental. It will probably cost you more a year and you’re going to be real happy you did. Lastly, a kind of hot button subject in our area is Cascadia Fault Zone and earthquake insurance. What I’ve heard, and obviously, I’m no expert, but if an earthquake happens, odds are that FEMA might help you with your primary residence because it’s where you live. But with your investment properties, it’s probably unlikely that FEMA is going to assist. I would make sure that your investment property has earthquake insurance.
Now there’s the actual process of renting out the property. Be sure to screen the people that you’re going to put in your property. My recommendation is that you do not make it a friend of a friend, a cousin, or some guy you met that’s so sweet and doesn’t have a job. None of these scenarios will make for good renters. You want a stranger ideally, because if they end of being terrible tenants and you have to evict them, you do not want to have to be nice about it. Screen their credit do a background check. There are resources online to assist with that. You also want to use updated forms when you’re filling out the rental contract. So there’s this organization that I use called Multi Forms Northwest. I am happy to give you a referral or help you process it if you want. I highly recommend Multi Forms Northwest because they’re specific to Oregon, and Oregon has all kinds of weird landlord/tenant laws.
The last thing to know if you’re making this an investment property is City of Portland has passed some residential rental laws that are going to be super important for you to know. Once you have a tenant in your property, you cannot evict them; terminate the tenancy, etc., unless they want to move out. If they move out, that’s fine. They give you a 30 day notice and everything’s great. Say you broke up with this great person that you met at the beginning of our conversation and you want to move into your house. You have to give the tenants a 90 day notice for any tenancy (month, two months, six months, a year lease 10 year lease, etc.) and then you have to give them what’s called a “relocation fee:. It depends on how many bedrooms are in each of the properties that you’re renting with the maximum being up to two bedrooms, at $4,500. And that’s once you give them notice to vacate.
If you have questions about any of this, please reach out because there’s some complicated stuff here to discuss. My email is [email protected] and my phone number 503-998-4878.
Have a great day guys. And obviously, I’m happy to meet and answer any further question you may have. Talk to you soon.