Thinking of Renting Your Layton Home?
“Low mortgage rates and soaring rents have convinced a growing number of homeowners to hang onto their former homes and become landlords instead.” This is according to an article published on CNN Money’s website. You can read the entire article by clicking here.
Many Layton home owners are considering renting their home because of the strong rental market in the area. A strong rental market combined with historically low mortgage rates is the perfect scenario to become a landlord.
Layton Offers a Strong Rental Market
When examining an area, to understand if it may be a good area to own rental property, we first have to understand the elements that create a strong rental market. Let’s examine a few critical questions we should be asking ourselves about the area.
Does the area have good employment opportunities? Does the area have low crime rates? Does the area have any other unique or attractive qualities that would attract well qualified renters? Let’s see how Layton stacks up when we answer these questions. We briefly discuss these questions in another blog post “Investing in Single Family Homes in Utah” which you may want review as well.
Does Layton offer good employment opportunities?
Layton is next to Hill Air Force Base which is one of the largest employers in the area. Hill Air Force Base has long been a cornerstone to the economic success of Layton and Davis County. The Air Force Base offers not only employment for military men and women, but also has a large number of civilian and contract employees. Many of the military men and women that are stationed at Hill are only there for several years and then get transferred to another base. Having the Base in Layton dramatically increases the need for single family rental homes in the Layton.
The Military base only makes up a portion of the employment opportunities available in the Layton Area. Layton is also home to Davis County Hospital and is close to the Free Port Center which is one of the largest manufacturing and distribution hubs in the county. The Free Port Center is home to employers such as Lifetime Products, Futura Industries, and Smith Optics.
There are also plenty of other professional employment opportunities in Layton which makes the city very attractive to anyone looking to rent a home.
Does Layton have low crime rates?
Layton has a relatively low crime rate as compared to both State and National averages as detailed by usa.com. The crime index for Layton is 1,262 compared to the state average of 1,435 and the national average of 1,723. The crime index number is calculated by usa.com alogorithims. The higher the crime index value the higher the crime rate. Layton ranks 61 out of 89 cities in Utah that were examined by usa.com for crime rates. While there are certainly safer cities in the state, Layton really performs quite will when compared to similar sized cities in the state. For instance the city of Ogden which is about 15 minutes North of Layton has a Crime Index of 2,489 and ranks 83 out of 89 cities in Utah.
Layton has below average crime rates for the state of Utah and coupled with strong employment opportunities makes it is a great city to own a rental home in.
Does Layton have any unique or attractive qualities that would attract well qualified renters?
Layton is centrally located along the wasatch front and has easy access to I-15 which runs North and South through Utah. Because of Layton’s central location and affordable housing it can attract individuals who may work in another city but wish to live in Layton. Layton is only a 30 minute commute to Salt Lake City which is Utah’s capital. There are many families and individuals who live in Layton and commute to Salt Lake because the cost of living in Layton is significantly lower than that of Salt Lake City.
Layton is also only about a 15 minute commute from Ogden and has a much lower crime rate than Ogden. Ogden has some great employment opportunities such as Weber State University and McKay-Dee Hospital, but many families would rather live in Layton and commute to Ogden and take advantage of Layton’s schools and safer neighborhoods.
Layton’s unique location gives it yet another advantage to prospective landlords who may want to rent out their Layton home.
Transition to Becoming a Landlord
While Layton, Utah offers a strong rental market and it may be appealing to transition your primary residence into a Layton rental home there are a few things to consider before throwing a “for rent” ad up on the internet. In order to have a successful landlord experience you need to make sure you do the following before renting your home:
1 – Make sure your home will cashflow as rental property.
This issue will become less important if you are in a situation where you have to move but can’t sell your home for what you owe on it. In these cases you still want to have an understanding of what your loss will be each month, but for some it may be better to lose a few hundred dollars a month by renting out their home then to have to pay thousands to cover the deficiency from selling their home for less than they owe on their mortgage.
If the above scenario doesn’t describe you then you want to make sure transitioning your primary residence into a rental home will not leave you in a negative cash situation each month. You want to make sure your rental home will produce a positive cashflow each month or on a yearly basis. You can learn how to calculate your cashflow by referring our blog post “Investing in Single Family Homes in Utah”.
It will be important that you can accurately estimate your monthly rent and expenses to accurately project your monthly cashflow.
2 – Know what market rent is for your home.
In the first step you were instructed to make sure your home will cashflow. In order to do this you will need to know what market rent is for your home. Remember that your mortgage payment doesn’t have any impact on market rent for your home. The best way to estimate market rent is to compare your property to similar rental homes that are for rent in your area. If your home is a 3 bedroom, 2 bathroom home that is 1800 square feet with a two car garage then you will want to find other properties with similar attributes to establish a market rent. If you find that that similar homes are renting for $1,250 per month then yours most likely rent for about that amount unless your home is in much better condition or it has more desirable amenities.
If you don’t know what your home will rent for it may be best to find a Layton property management company that can provide you a rental rate analysis. At ProRenter Property Management we offer FREE rental rate analysis for anyone considering using our services.
3 – Learn how to screen prospective tenants.
You will need to make sure you have a rental application that will collect pertinent information from any prospective tenants. You will also need to make sure you can run a credit and background report, verify income, and get previous landlord references at minimum. You do not want to rent to the first person that comes along with first month’s rent and security deposit. You need to make sure they can afford to pay you rent each month.
4 – Make sure you have a solid lease agreement.
Your lease agreement should be written by a landlord attorney and should be in line with Utah laws. Don’t just pull a random lease agreement off the internet. Make sure your lease is written specifically for the state you live in.
5 – Have an attorney on retainer and know how to serve a “3 Day Notice to Pay or Vacate”.
If you have screened your tenant thoroughly you may never have to deal with evicting a tenant for non-payment, but it is important you are prepared just in case. One of the most expensive mistakes that do-it-yourself landlords make is not taking swift action when a tenant doesn’t pay rent. You need to have your attorney in place before this happens, so you can serve the appropriate legal notice and evict if necessary. A “3 Day Notice to Pay or Vacate” is the initial step in the eviction process in the State of Utah. This notice, when served properly, gives the tenant the option to pay the amount due on the notice within three days or vacate the premises. If they do not pay or vacate then your attorney will need to file a complaint in the county court and a judge can order the tenant to leave. There are many nuances in serving legal notices and evicting a tenant, so make sure you are well informed before you take any legal action against a tenant.
If these 5 items seem a little overwhelming to you then you may want to assess whether you want to manage your rental home yourself or if you want to hire a Layton property manager. It may be helpful to review our blog post “Property Manager vs. Do-It-Yourself Landlord” to understand which option is best for you.
While there can been many financial benefits from becoming a landlord there can also be many pitfalls if your rental home is not managed properly. If you are considering renting your Layton home and would like to learn more about ProRenter’s Layton Property Management Services then feel free to learn more about our services by clicking the link below: