Thinking of becoming a landlord? Here are some helpful things to consider to decide if this is the right decision for you!
CHECKLIST
- Open up LLC and move home to LLC
- Get new insurance policy for investment property
- Homestead will be removed from your home so taxes will increase
- Although Florida has no state-level income tax, it does charge a state sales tax at a rate of 6% (https://floridarevenue.com/Forms_library/current/gt800034.pdf) on all rental income. Please consult a CPA to verify
- Subscribe to online landlord tenant portal like turbo tenant, avail etc.
- Consult CPA on how to structure business and tax implications
- Open Escrow account to hold security deposit. You can do this at a local bank.
- Read through all statues on the Florida Landlord Tenant Laws.
- Ask your HOA if you are able to rent. Certain communities have a maximum amount of units they will permit to be rented. There is no way around this as your tenant will have to be approved with the HOA. Also ask them if there is a minimum time you have to own before you lease? Some HOAs require the primary owner has to live in the home for one year prior to leasing it.
- Rental Tax Certificate: Apply to local governing authorities prior to renting. CLICK HERE
How does listing your home for rent work?
When listing your home for rent, we recommend having the potential tenant submit a full rental package which includes background check, credit score, eviction history, contract to lease, proof of income at least 3x monthly rent. The landlord will require first, last security deposit (one months rent). HOA's also have their own separate fees as well. The cost to list your home for rent is one months rent split between the listing brokerage and the tenants brokerage. Fees include photos, MLS listing, supra lockbox, coordinating and communicating with cooperating brokers, providing and reviewing documents, qualifying rental applications. We are present on move in day for final walk thru, document a move in checklist and turn over the keys! Our brokerage only facilitates annual rentals.
Please email us [email protected] all of your HOA documents, rules and regulations. They will be uploaded to the MLS prior to listing. We will also need a spare key to the home, fobs to access amenities and the gate code entry.
Questions we will have for you:
- Will you permit pets? If so, what is your pet deposit?
- What does the HOA cover VS tenant (I.e. Utilities, Water, Cable, Internet)
- Most landlords require their tenants to have renters insurance. Will you be requiring that?
- Have you confirmed with your HOA or master community that you are permitted to rent your property?
- Furnished or unfurnished?
- Is parking included?
- Are there fees for additional spaces?
- Is laundry included?
Is renting profitable?
Utilize a helpful calculator below. It is important to calculate rental income, estimate vacancy rate (a common rate is 5%-10%), deduct operating expenses from rental income. These expenses typically include property taxes, insurance, maintenance and repairs, property management fees (if applicable), utilities not covered by tenants, HOA fees (if applicable), and any other recurring costs associated with maintaining the property. Once you deduct operating expenses from rental income, you'll get the net operating income (NOI). This represents the actual income you receive from renting out the property. If you have a mortgage on the property, consider the monthly mortgage payment as part of your expenses. Deduct this from the NOI to get the cash flow after financing. Consult with tax professional for the income tax.
Utilize this helpful rental calculator: CLICK HERE
What else should you know?
Legal Requirements and Obligations:
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- Fair Housing Laws: As a landlord in Florida, you must comply with federal fair housing laws, which prohibit discrimination against tenants based on protected characteristics such as race, color, national origin, religion, sex, familial status, and disability.
- Landlord-Tenant Laws: Florida has specific landlord-tenant laws that outline the rights and responsibilities of both parties. These laws cover various aspects such as lease agreements, security deposits, rent increases, repairs, and evictions.
- Lease Agreements: You must provide tenants with a written lease agreement that clearly outlines the terms and conditions of the tenancy, including the duration of the lease, rent amount and due date, security deposit amount, pet policies, and rules regarding maintenance and repairs.
- Security Deposits: Florida law limits the amount you can charge for a security deposit, and it specifies the procedures for collecting, holding, and returning security deposits at the end of the tenancy.
- Maintenance and Repairs: As a landlord, you are responsible for maintaining the rental property in a habitable condition and making necessary repairs in a timely manner. Failure to do so can result in legal consequences and potential liabilities.
- Notice Requirements: Florida law specifies the notice requirements for various actions such as entering the rental property, terminating the tenancy, or making changes to the lease agreement.
- Evictions: If a tenant violates the lease agreement or fails to pay rent, you may have grounds for eviction. However, you must follow the proper legal procedures outlined in Florida's landlord-tenant laws, which typically involve providing the tenant with notice and filing a lawsuit in court if necessary.
Property Management:
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- Rent Collection: You are responsible for collecting rent from tenants in accordance with the terms of the lease agreement. This may involve setting up a system for rent collection, such as online payments or direct deposit.
- Property Maintenance: Regular maintenance of the rental property is essential to ensure it remains in good condition and to address any issues promptly. This may include tasks such as landscaping, pest control, HVAC maintenance, and repairs.
- Tenant Screening: It's important to thoroughly screen prospective tenants to minimize the risk of renting to individuals with a history of evictions, property damage, or other issues. This typically involves conducting background checks, verifying employment and income, and checking references.
- Tenant Relations: Building positive relationships with tenants is crucial for a successful landlord-tenant relationship. This involves effective communication, addressing tenant concerns and complaints promptly, and respecting tenants' rights.
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Legal Protections and Rights:
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- Property Rights: As a landlord, you have the right to set rules and policies for your rental property, as long as they comply with fair housing laws and other applicable regulations.
- Right to Entry: Florida law specifies the circumstances under which you can enter the rental property, such as for repairs, inspections, or in case of emergency. Generally, you must provide reasonable notice to the tenant before entering the premises.
- Legal Recourse: If a tenant breaches the lease agreement or causes damage to the property, you have legal recourse to seek damages or pursue eviction through the court system.
- Financial Considerations: Although Florida has no state-level income tax, it does charge a state sales tax at a rate of 6% (https://floridarevenue.com/Forms_library/current/gt800034.pdf) on all rental income. However, your operating expenses like mortgage interest, property taxes, property insurance, structural improvements, and yard maintenance can reduce your taxable rental property income. Rental property taxes in Florida differ by county (http://www.tax-rates.org/florida/property-tax) so it’s important to find out how much you will be paying so you can factor that into your rent price to avoid taking a loss. Haven’t purchased your rental property yet? Find out which counties charge the lowest property taxes to help maximize your profits! Best Practice: Keep receipts for all of the services you pay for to maintain your rental property to help with tax deductions come tax season.
To learn more: search the https://www.turbotenant.com/state/florida/
Florida Renters’ Rights and Landlord Responsibilities
- Give tenants three days before filing for eviction.
- Maintain habitable housing or tenants may withhold rent.
- Florida landlords must return a security deposit within 15 days if there are no deductions or within 30 days if there are deductions.
- Florida landlords must provide 12 hours advance notice of entry (except in emergency situations).
- Specifically disclose any lead paint on the property.
On the flip side of Florida rental laws are tenant responsibilities. Renters are obligated to uphold their part of the lease agreement just like landlords.
- Comply with housing codes: Florida tenants are required to do their part in making sure the unit is keeping up with housing codes by maintaining the safety and cleanliness of the building.
- Take care of the property: Tenants are not allowed to destroy or deface any of the items within the unit belonging to the landlord, including most appliances.
- Maintain the plumbing: Along with these first two points, Florida tenants should be keeping plumbing fixtures clean and functioning.
- Keep garbage to a minimum: In order to keep the unit safe and clean, tenants should be removing garbage frequently and disposing of it properly.
- Mind the neighbors: Tenants can’t disturb the peace of their neighbors with unsafe behavior or noisy activities.
Criminal Background Check
- HUD (Federal) laws do not classify criminal backgrounds as a protected class, but making a decision to rent based off a criminal background alone could lead to a discrimination charge as it impacts certain protected groups of people disproportionately. However, if the criminal background check revealed a crime for the manufacture and distribution of drugs, homicide and/or stalking, denying the application is allowed.
- Landlords should have a consistent and equal policy or procedure in place to follow regarding criminal background checks so as not to discriminate against one class of people over another.
- HUD states that a landlord cannot ask about arrest records, only convictions, as innocent people are commonly arrested though the situation may not have resulted in a conviction.
- Miami-Dade County states you cannot ask about prior eviction records in the application process until an offer to rent has been made.
Tenant Screening Criteria
The State of Florida has no added laws or restrictions around the collection of criminal background checks, though Miami-Dade County prohibits checking for prior eviction records until a conditional offer to rent has been made. Adherence to general federal law is required. To avoid the perception of discrimination, make sure your screening criteria is stated and is consistent and equal for all groups of people.
Application Fees
The State of Florida has not capped the cost of application fees.
Disclosures
Provisions that, if left out, invalidate the lease:
- Radon Gas notification and information.
- If a Florida landlord leases five or more units, they must disclose the name and address of the bank where security deposits are held.
To learn more: search the https://www.turbotenant.com/state/florida/
