Becoming a homeowner is like crossing a threshold, stepping into the world of investment and property value. If you have rented in the past, as most of us have, you have already been part of the real estate industry as a casual consumer of rental properties, but the true player in this game was your landlord. As the owner of the property, it was their responsibility to both take care of the property and find residents who were not a risk to the home. This responsibility is why leases tend to be so strict and why even very nice landlords often have seemingly oppressive rules.
The Renter’s Perspective on Homeownership
When you were a renter, you had to adhere to these rules as the conditions of staying in a home and certain rules may have seemed more unreasonable than others. However, when you buy your own home, suddenly all that effort to protect the walls, floor, and even the yard begin to make sense.
Many renters saving up for their first home dream of all the standard lease rules they’re going to ‘break’. Hanging pictures and shelves wherever you want, taking out walls you don’t like, and landscaping to your heart’s content are among the most popular first-time homeowner dreams, but before you repaint that living room wall matte black for your starscape or dedicate an entire bedroom to your dogs, realize that you’re not just a kid with parents on vacation, you are the landlord now with yourself as the possibly risky tenant.
Being Your Own Landlord
If all you have known before your first house is living with your parents and then renting a sequence of homes and apartments, it can be easy to get the wrong impression of home ownership. You see all the freedoms unrolling before you like a red carpet. The freedom to have any pet you want, the freedom to remodel and renovate, or the freedom to host guests for as long as they want to stay. What many don’t see (at first) is the importance of taking on all those responsibilities your landlord was taking care of. Consider asking yourself a few questions to make sure you’re not just excited about owning a home, but also ready to take care of it.
- Do I know all the maintenance tasks required every year to keep the home as nice as it is today? What about the maintenance required every 5 years?
- What will and will not lower the property value of my home making it harder to sell at a profit if/when I do decide to sell?
- What do I do if something important breaks and there’s no landlord to call and fix it?
- What steps are necessary to keep the home safe and livable that I might forget?
These are questions every homeowner and landlord must ask themselves not just after buying a property, but every time they make a decision. Becoming a homeowner is all about understanding where your landlords were coming from and why they said ‘no’ to so many great ideas or tenant freedoms. We’re not saying you can’t remodel or let your dogs run free, simply that you should do so responsibly with the priorities of a landlord and property owner in mind.
A Landlord’s Priorities
As a renter, your priorities were to live your life, follow the rules, and enjoy yourself within those parameters. If you wanted to do something wild like repaint the interior or rebuilt a porch, you would contact your landlord why may decide to deny, approve, or do it themselves. Their decisions might often seem opaque and unpredictable but each landlord is serving a collection of priorities shared by every homeowner. Priorities that you now share by becoming a homeowner yourself. We’re going to take a quick look at these priorities, then go into how you, as your own landlord, can consider them with every decision you make for your new home.
Priorities to Remember
- Prevent Damage
- Regular Maintenance
- Property Value – Rental
- Property Value – Resale
- Profit and Opportunity
- Responsible Tenants
These priorities come together to the general goal of maintaining and/or improving the quality of life and real estate value of a home. However, actually serving these priorities is a lot more complicated than you might think. They should factor into every decision you make now that you are your own landlord. Including keeping an eye on the residents to make sure they don’t do anything that might accidentally damage the home.
Prevent Damage to the Home
Damage to a home can come in many forms. Most renters are familiar with the ways in which residents can damage a home like punching holes in the walls or scratching up the floor and as a home owner, you are now the only person who could be held responsible for the repairs should this damage occur.
You will also want to think about the damage done by pets. There is a reason many leases ban or limit the pets tenants can bring along and that is because pets don’t understand property damage. They will scratch, chew, roll, and ‘go’ wherever they are allowed or trained to. An irresponsible or careless pet owner can cause significant damage to a home and the only one paying for repairs is you.
Then there are outside threats like the weather, the soil beneath your home, and the possibility of crime in the neighborhood. A certain amount of maintenance, security, and vigilance on all fronts is necessary to protect your home from unpredictable outside causes of damage.
Keep the Home in Good Condition
The next concern is the structural condition of the home itself and the quality of life it can provide to those within. This is achieved through regular maintenance and inspections. Many renters feel put upon or even threatened when their landlord wants to do a yearly inspection and call in maintenance crews to do regular work on the house but in reality, this is every homeowner’s duty and now it is yours as well.
As your own landlord, it’s now your job to schedule regular roof and basement inspections, to keep up with the 5-year siding maintenance schedule, to flush the water heater and change out the HVAC filters among many other little maintenance tasks. You will also need to be prepared to take on every repair when things break or malfunction whether it’s your appliances or burst pipes in the walls.
Protect the Property Value
Property value is something a renter hardly ever considers but it the entire world of a homeowner and landlord. Your property value relates to what you paid for the house when you bought it, what it might rent for if you choose to rent it out, and the price it might sell for if you should choose to sell some years on the future. A lot of things go into property value from the age of the house to the color of the walls to the curb appeal. Some things, like paint color, can be personalized by the current resident then returned to a salable neutral state while more drastic renovations could make the home harder to sell even if you enjoy them a great deal.
When it comes to property value, there are actually two separate priorities: Maintenance and improvement. Maintaining property value is what landlords mostly focus on by preventing damage and keeping up with regular maintenance tasks. Improving property value is a matter of putting time and money into a home in ways that will cause it to sell for more than you paid to improve it. Updating the kitchen, for example, is a huge property value increase while more unique improvements like stair-slides can increase value but only for future buyers who share your tastes.
Owning a home and being able to personalize everything about it is great, just remember to keep property value in mind whenever you’re considering making a change.
Find Responsible Tenants
When seeking a new tenant, a landlord’s biggest concern is finding someone who will treat the property and the residential agreement responsibly. Now that you are both your own landlord and the current residents of your new home, there is no one to tell you what you can and cannot do. No one to tell you to pay the mortgage on time, which is what rent mostly covers. You are responsible for holding yourself to good resident responsibilities. If you let your pets or children run wild, you will be the one worrying about repairs and property value. If you don’t keep track of your finances, the worst case scenarios are much more serious.
As the homeowner, you have invested your own savings and future income into this house. This should cause you to also take greater responsibility and pride in taking care of your home and living in it responsibly.
Turn the Home Into More Profit
Finally, don’t forget that owning a home can be a gateway to greater financial and investment opportunities. You now own a residential property and can make money or open doors with this the same way a landlord or a big real estate mogul could. You can rent out spare rooms without worrying about a subletting clause or you could even live in an apartment and rent out the entire home.
You can build a loft apartment above the garage and Airbnb it or build a little cottage in the backyard and do the same. You can sell the home for more than you paid for it and keep the difference after closing the mortgage or save up for a second home, move into it, and rent the first one becoming a landlord for someone else. Even as you are breathing in the beautiful scent of your very first owned home, this can also be the beginning of a chain of profitable real estate decisions if you choose to go that route.
Becoming a homeowner for the first time is a big step, one that few people are fully prepared for the day they close the deal. One of the best ways to ready yourself for all the responsibilities and opportunities of homeownership is to remember that while you no longer have a landlord to answer to, you are your own landlord now. For more resources on preparing to buy and own your first home, please contact us today. We’re always ready to lend a hand and offer some helpful advice.