OR: Ins and Outs of Newport’s Rental Market
Flippers and fixer uppers take note: you need more than a convenient location and a fresh coat of paint to make your income property lucrative. Since the market on Aquidneck Island fluctuates seasonally, with the influx of Navy personnel, Salve Regina University students and summer visitors, it’s a far more unique real estate environment than anywhere else in the Ocean State. With that constant demand for high-quality, reasonably-priced rental properties, and the surprisingly limited supply, tenants often come up short.
So it’s a landlord’s dream. But those visions of cash cow sugarplums dancing in your head might force you into a cold sweat if you aren’t savvy and strategic with your real estate business. And make no mistake: it is a business, because the money will not just fall in your lap. As a real estate agent specializing in the rental market for nearly two decades, I have worked with three types of landlords and thousands of tenants –and I have advice for all of them.
WHICH LANDLORD TYPE DEFINES YOU BEST?
- You came to the island to buy a property and want to know how it might pay for itself. You won’t live in it. You might be from out of town or possibly a local looking to invest.
- You live out-of-state and are interested in buying a house to settle into, to live in it for a couple of months as a vacation home, then you want to see what else you can do with it the rest of the year.
- You are looking for a cheap property to buy as a retirement fund, put a little money into it to fix it up and then rent it. You are likely local and recognize the long-term value of real estate here.
Ok, so you might fit into another category. But whatever your type, the “flippers and the fixer-uppers” are all asking the same questions about income property. “What do I need to do to make this property pay for itself? What is a renter looking for?”
KNOW THE RI RENTAL RULES
Rule 1. An out-of-state landlord needs to have a registered agent and register with the Secretary of State’s Office.
Rule 2. Check how each town defines short-term rentals: In Newport, for any rentals 9 months or less, a rental dwelling registration is required. However, rentals 31 days and less are not covered by this registration. Short-term rentals under 31 days need a special use permit depending on the property’s location.
Rule 3. You are required to have homeowners insurance, but you should also let your provider know you are renting. If anything happens, like a fire or flood, the insurance coverage changes if the property is not owner-occupied.
Rule 4. The tenant is not legally required to have insurance of their own, but you should require it and incorporate it into the lease. This insurance covers tenant’s belongings, as well as their hotel if damage forces them out. It covers tenant for liability, too. Your homeowner’s insurance doesn’t cover the tenant or their belongings.
Inside and out, keep it super clean. Most tenant complaints are cleanliness issues upon move in, while cleanliness is also the foundation of most landlord complaints upon move out. Have the tenant fill out a rental condition sheet.
There should be no broken doorknobs or light fixtures, no peeling paint, no scratched floors or stained carpet. The property needs to be lead compliant, so get a certificate of lead compliance. Keep the basement and garage clean. It’s really a sticking point with these rentals. If you’re renting a furnished apartment or home, keep the furnishings clean and modern. Equip the laundry and kitchen with modern appliances. Maintain nice curb appeal with mowed lawn and tidy landscaping.
BE FIDO FRIENDLY
Be open to pets. A lot of families coming to the area have pets, and they have a hard time finding a home. You cannot take an extra deposit for pets, but you can raise the rent if they have a pet to make up for potential damage. You can also add a pet addendum to the lease.
DO BACKGROUND CHECKS
Run a credit report on each potential renter, with their permission. It would show that they’re not in over their head financially, and that they can pay their rent. Look at their previous bills, medical bills or credit cards, pay stubs. Verify employment, and ask for a reference from at least one past landlord. Last but not least: Be familiar with the Fair Housing Act, the RI Landlord and Tenant Act as well as your town’s rules and regulations.