Planning to rent your backyard cottage or ADU (accessory dwelling unit)?
Renting your property is a great way to earn additional income. Before starting your journey, it pays to understand all the essentials of managing an ADU rental. That's why we put together this helpful guide. Read on to learn about the key aspects of renting your backyard cottage or ADU in Seattle.
See also: The Ultimate Guide to Backyard Cottages
Your first step is to make sure that your ADU complies with Seattle's Municipal Code. Seattle recently updated its regulations for backyard cottages and ADUs. Here are a few of the highlights:
See also: Can I Build a Backyard Cottage? Seattle's 2019 Rules Make It Easier
As a landlord in Seattle, you have to comply with the limits set on the amount of money you can charge a tenant. Caps have been set for move-in fees, pet deposits, and security deposits.
Follow these rules:
See also: Sheds, Garages & Backyard Cottages: Seattle's Accessory Buildings Rules
Proper lease agreements cover all the key issues. When you draft an agreement, add all the possible clauses that could make your life easier in the future.
Cover the terms on the security deposit, rent amount, entry, alterations, maintenance, occupancy limit, and termination. Always have a written agreement instead of an oral agreement. You may want to consult an attorney to avoid potential problems.
Rent collection starts with a lease agreement that sufficiently covers the rent collection procedures. Offer payment methods that make it convenient for your tenants to pay rent.
Have a plan for late or failed payments. The lease agreement should outline the consequences of delayed or completely failed payments. Study Seattle's tenant eviction laws for dealing with the most complicated situations.
See also: Monetize Your Home
The best way to deal with disputes is to prevent them in the first place. Understanding all the relevant laws and regulations allows you to become better and more knowledgeable at self-managing.
Experienced landlords consider the alternatives before turning to the court system. Sometimes disputes can easily be settled out of court. This approach saves time and reduces stress for both sides of the contract.
Rental property insurance is a must for every landlord. Weigh the options available on the market to find the best offer for your needs. Consider the following points when evaluating insurance plans:
Your Seattle backyard cottage or ADU rental investment could benefit from the services of a professional property management company. As a landlord, you have to choose between self-managing or hiring a property manager.
Let's take a closer look at the pros and cons of self-managing versus hiring a company.
When you work together with a property management company, you need to pay fees. This cost could be a fixed fee or a percentage of your monthly rental income.
Self-managing is a great option for people who need to feel complete control over their investment at all times. This means that you are responsible for maintenance, screening, repairs, marketing, and every other landlord duty.
New landlords are often surprised at the amount of time self-managing really takes. The number of tasks that pile up over time is too much to handle for many people.
Being a landlord means you need to understand the ins and outs of the relevant laws and regulations. Eviction problems, especially, have a high risk of backfiring as costly legal consequences to the landlord.
While you may save on property management fees, there's no doubt that professionals know how to optimize the budget for maximum profit. And they are likely to have local partners who offer better rates for bulk service orders.
When you work with a professional property manager, you stand to benefit from their long-term experience. This expertise is reflected in informed decisions and established relationships with vendors.
One of the major advantages of partnering with a property manager is the time you'll free up. Additionally, you don't have to deal with all the stress and worries that result from self-managing.
Property management companies work to reduce your vacancy rates to a minimum. This is achieved by combining offline and online marketing techniques and using strict tenant screening protocols.
Every contract with a property management company entails fees. Usually, you have to pay a percentage of your monthly rental income. In most cases, this fee amounts to 13% to 15%.
Not all property managers hold their partners accountable for providing high-quality services. Always make sure that your property management company has strict quality standards for the services they buy from others.
Ideally, your property manager is a reliable partner who aims to grow your investment. When you fail to conduct adequate research, you might work with a company where people only care about receiving the monthly fee.
Renting your backyard cottage or ADU in Seattle can be a great source of extra income. As with any other major life decision, you should understand all the basics before making the move.
If you are interested in adding an ADU or backyard cottage to your Seattle home, or converting an existing structure to a backyard cottage, please get in touch. We would love to discuss your unique situation and design a structure that can earn rental income for decades to come.
This post is from guest contributor Kellie Tollifson, from T-Square Properties. For more information about how you can create an ADU as part of a remodel or addition project, please feel free to contact us at CRD. We are always happy to help.