Before you buy an investment property in Milwaukee, it’s important to know what you can and cannot do with it after the purchase. Here are some rental restrictions you should be aware of before you buy an investment property in Milwaukee.
Buying investment real estate is one of the best ways to generate wealth. That said, you don’t want to buy a property and later find out that you are not able to do with it what you want. Buyer’s remorse can kick in quickly when you purchase a property that doesn’t turn out to be what you are expecting. In some cases, you may not be able to rent out the house at all! It’s important to do your research before buying an investment property in Milwaukee. Once your homework has been completed, investing in Milwaukee may be one of the best financial decisions you can make!
And if you are just starting out, you may want to read more about financing your first investment property on this link.
Can You Rent It Out Legally?
If you purchased the house using an FHA loan, there are a few restrictions on when you will be able to rent out the property. With an FHA loan, you’ll be required to live in the property yourself, either in one of the rooms of the home or in one of the units if you purchase a multi-family property. This is actually a great strategy many investors use when starting their portfolios. Using an FHA loan you can buy a house of up to 4 units, living in one of those units yourself is a great way to have your tenants pay off your mortgage while having free room and board.
Buying a house within an HOA can also limit your ability to rent out the property. There may be rules and regulations imposed by the association which limits your ability to rent or will set specific requirements your tenants must meet before renting the home out to you.
When Can You Enter The Enter The Property?
If you are renting your property, then you most likely know that you can’t just barge in whenever you’d like. First you’ll need to notify tenants when you plan to visit, and also to provide a valid reason why you need to enter the property. Valid reasons for this are repairs, inspections and any maintenance-related issues. Your tenants should be informed on time and, on their side, they should be receptive to your needs. However, as a landlord, you must respect their privacy!
What Should You Know About Fair-Housing?
Before you buy any investment property in Milwaukee, you’ll need to be informed about all of the fair-housing laws. This means that you cannot refuse to rent a house because of someone’s color, race, religion, sex, familial status, handicap or nationality. Violating some of these rental restrictions may cost you a quite severe fine, which goes from $10,000 and up. The more violations you make – the bigger penalty you pay.
How Many People Can Live There?
In every city and in every state, there are rental restrictions regarding occupancy. In most cases, local laws will dictate a maximum per bedroom, however you can go on and limit this number even further. If the common area is small or of there aren’t enough bathrooms you may not be able to keep with plenty of people living in your home. However, you should make sure that the future tenants are pre-informed about your potential residency limits. If you have to explain them that your property isn’t large enough for their whole family AFTER they’ve finished the application process, you’ll have some angry people on your hands.
What Can’t You Put In The Lease?
When drafting your lease, there are things you will need to include such as the amount of the rent, lease terms, and consequences of doing something to break the lease. That said, there are a number of things you cannot include in the lease such as asking the tenants to be responsible for the repairs or making their security-deposit non-refundable. Of course, if the tenant is responsible for damage to the home, they will be on the hook for the repair bills which are hopefully covered by the security deposit.
When buying an investment property it is best to review the laws for your specific area so you know exactly what you can and can’t do. If you are in an area with an HOA, the rules about renting can become even more strict. If you are thinking about buying an investment property in Milwaukee, not only can we help you find the perfect property, but we can also help to ensure you are aware of all of the rental restrictions imposed on your property.