Whether due to a sudden relocation, an inheritance, or shifting market conditions, many homeowners find themselves transitioning into the role of a landlord completely by accident. When you unexpectedly begin renting out a property in a unique, fast-growing desert metro like Phoenix, the learning curve can be steep.
If you have suddenly found yourself managing a rental property in the Valley of the Sun, here are five key things you should expect.
1. Intense Local Heat and High Maintenance Costs
Phoenix summers are notoriously brutal, and the extreme heat takes a heavy toll on properties. You can expect HVAC systems, roofing, and landscaping to require frequent upkeep. A broken air conditioning unit in July is a true emergency that requires immediate, costly repair to keep the home habitable.
2. Strict Short-Term vs. Long-Term Regulations
Depending on whether you choose to rent your property out as a traditional long-term rental or a vacation home, the legal landscape varies wildly. Phoenix and its surrounding municipalities have specific registration requirements, local tax rules, and strict HOA guidelines regarding tenant occupancy that you must navigate.
3. A Shift from Homeowners to Landlord Insurance
Your standard homeowner’s insurance policy will not protect you once a tenant moves in. You must transition to a landlord-specific policy (such as a DP3 policy) to ensure you have proper coverage for structural damage, liability, and potential loss of rental income.
4. Complex Real Estate Tax Implications
Being a landlord means running a business. You will need to carefully track your rental income against deductible expenses like mortgage interest, repairs, and depreciation. Furthermore, if you eventually decide to sell, you must be prepared to navigate capital gains taxes and depreciation recapture.
5. The Choice Between Self-Management and Hiring Pros
Managing tenant screening, drafting legal leases, and answering midnight maintenance calls takes immense time. Many accidental landlords quickly realize they must choose between committing to a hands-on management routine or hiring a local property management company to handle daily operations for a percentage of the rent.
Contact Us
Ready to breathe easy and enjoy passive income from your rental property? Let GoldenWest manage that property for you. Contact us today by calling (866) 545-5303 or click here to connect with us online.
