Mikelbank says more cities are offering these classes because of an increase in "casual landlords" who may not understand all the legal regulations involved in owning rental property.
Fees for these administrative services add up.
"The cost for registration, inspections and training can be a couple hundred dollars a year," Mikelbank says.
3. Cleaning, care and maintenance costs
To attract tenants, landlords may have to spend up to $1,000 on paint, carpet and landscaping, Mikelbank says. Otherwise, it might be difficult to find a reliable tenant.So, homeowners who can't sell and decide instead to rent their home should plan to spruce up the place -- just as they would before a sale.
"The same upkeep problems that could be holding a house back on the 'for sale' market could also be holding it back from the rental market," Mikelbank says. "The difference is, houses can be sold 'as is,' but a renter may not be willing to rent 'as is.'"
When a tenant does move in, the landlord may be contractually obligated to fix new maintenance issues, such as a leaky toilet, Sevajian says.
Once the tenant moves out, the landlord will need to spend more money to clean up the home for the next resident, she added.
Landlords should be prepared to pay these expenses out of pocket, Sevajian says.
"Owners can require a security deposit to help cover certain cleanup costs, but it won't pay for everything if the tenant stops paying rent early or badly trashes the house," she says.
4. Increased taxes
Many states and municipalities have tax rules that favor owners who live in their homes, such as the homestead exemption, Mikelbank says.These tax breaks don't apply to investment property. So, new landlords should be aware that they may have a higher tax burden on their investment property.
This issue is especially pertinent to homeowners who turn a primary home into a rental. An owner will probably have to give up the homestead exemption if he or she moves out of a property while continuing to own it. This would mean higher property taxes.
Once the real estate market rebounds, an owner may decide to put his or her home up for sale, Mikelbank says. But if that person hasn't lived in the dwelling for at least two of the previous five years, the owner likely will lose his or her capital gains tax exemption, which allows individual filers to keep $250,000 of profit from the sale tax-free.
Of course, other expenses related to rental properties actually generate tax breaks for the landlord. Mikelbank urges novice property investors to talk to an experienced tax professional to understand how becoming a landlord could affect the individual's tax situation.
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