Putting Your Condo for Lease

Times change. Condo inventories rise, sales are slower and falling prices are few of the reasons why many Bangkok condo owners change from being just unit owners to landlords. That is, until the market improves. But before you take that decision, you need to know a few things. Remember that once you become a landlord, you also agree on the legal responsibilities and potential liabilities.

Below are a few know-abouts before you lease your Bangkok condo:

  1. The  first thing you need to know is if your condominium permits rentals. They also might have restrictions on the number of units that can be rented, levy a minimum lease term, require a board approval of the lease, etc. To be sure, check the documents of your condominium.
  2. Know how much the lease will be. Don’t overprice, or you’ll never get a renter. Rather, know what similar condos in your area are renting for per month. Find out what amenities and services are included, and if landlords offer incentives like gift cards or even cable.
  3. Calculate the numbers and see if you can cover. There are a number of actual expenses, and you need to consider them. Few of these are mortgage, condo fee, real estate taxes, insurance, preparation costs, advertising, commission for the rental agent, rent loss on turnover, costs for repairs, legal fees if problems occur, and many more.
  4. Learn the local laws regarding leasing. Regardless if you’re just renting out one unit, you must understand the local laws on tenant-landlord relationships. Why? Because some jurisdictions oblige you to register the property or even obtain a business license. Almost all cities with rent control require rental registration, and failure to do so can result to costly fines.
  5. Know that your real estate tax will rise when you convert an owner-occupied condominium into a rental property. There are two reasons why. First, some jurisdictions give Homestead Exemption for owner-occupied residential real estate. This benefit spares a portion of the property’s value from taxation. Once you convert your property, you lose this privilege. Second, a non-owner occupied property is assumed to be held for investment purposes. Thus, tax rates are higher.
  6. Paperwork, paperwork. If you don’t have a renter agent and you are renting out your condominium yourself, you are in charge of taking care all the paperwork needed. You are responsible for the advertisements needed for the lease, and in showing the condo to prospects. You’ll also need to keep accurate record of your income and expenses for tax purposes.
  7. Know your tenant’s history on payment terms. It will give you a bird’s eye-view on your tenant’s payment history, and a clue on foreclosures and bankruptcies.
  8. Get a suitable insurance. Call your insurance agent and tell them your plans. Although it can be another expense, remember that the cost is nominal compared to the added protection it can provide from your exposure to potential lawsuits.
  9. A good lawyer is a must-have. He can help you through any process, decisions and even lawsuits.
  10. Follow the laws on fair-housing. Federal law protects discrimination on the basis of sex, color, race, religion, handicap, etc.

 

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