As a landlord, a primary responsibility is staying up-to-date with rental property laws, codes, and regulations. In Texas, there is one requirement that any hopeful rental property owner should be aware of. While the specifics vary city to city, Texas is known as a rental property registration state because many of the cities have adopted their own ordinances surrounding registration and code inspections. Depending on where your property is located, this could mean an annual registration process, as well as rental property inspections that are required at varying frequencies. In this post, we’ll provide a run-down of what you might encounter as a Texas rental property investor. However, it’s necessary to remember that each city and municipality has its own regulations, and to consult with a local agent for more insight.
Rental Registration Process
While there is no state-wide ordinance, several cities have their own requirements regarding Texas rental property registration. For example, in 2017, Dallas adopted the Single-Family Rental Program, where landlords must register their properties each year with the city. Garland, TX also has their own Single-Family Rental Program, where the requirements are that each property is permitted by Code Compliance. While these specifically reference single-family, many ordinances include condos, duplexes, and townhomes as well. The exact process differs based on the city, but investors can usually expect to fill out a registration form and have a city-facilitated code inspection performed on the property to check for violations. There may be registration fees as well as an inspection fee that varies from city to city. Depending on the municipality there may also be a penalty if a resident moves in before the registration and inspection processes are completed. On top of the local authority, some HOAs may require you to register with them as well. Checking in with a property’s HOA requirements before buying and/or renting out your property to ensure that you’re following regulations will be beneficial in the long run.
Will I Need a Local Agent?
In some cities such as Fort Worth, a local agent is required to accept legal services and also as a point of contact in case of emergencies. For out-of-state investors, this means that it is especially important to have a local resource who can handle the legal registration process for cities that require it.
Rental Property Inspections
Depending on the city, a rental property may be required to undergo inspections at varying frequencies. These inspections are often included in the rental property registration process. These inspections may cost a minimal fee, and there can be additional charges depending on code violation situations and per the city. Inspections are done by the local authority and are on a pass or fail basis. If they determine that there is a part of your property that is not up to code or fails, they will typically provide you an allotted amount of time to resolve the issue before a re-inspection.
Checklists
Some cities provide a checklist that details what they are looking for during an inspection. For example, North Richland Hills, TX has a form available on their website. Additionally, the Dallas,TX, website provides a checklist of what will be reviewed during the inspection. Some common items include:
- Electrical safety items.
- Functioning air conditioning/heating units.
- Roof safety.
- Proper gutter drainage.
- Rot, rust, or decay in the interior or exterior.
- Securely attached guardrails for balconies, stairwells, etc.
- Leaky faucets or drains.
Each city has its own set of criteria and what they consider to be a pass or fail inspection score, so it’s important to look at the list for your city specifically. Again, if you have a local property manager or agent who is aware of these regulations, they can aid you in staying on top of these regulations so that you don’t get caught unprepared by unforeseen expenses or a vacant property.
Code Inspections During Vacancies
Speaking of… One important thing that investors need to know is how inspections affect your property’s vacancy period. In a city like Godley, TX, there are strict requirements on when a property requires a code inspection. For vacancy periods, there are two times to note:
During the First Registration
Many cities require landlords to undergo an inspection as a part of their first registration process. Especially for landlords who are preparing to acquire a new property and hope to keep vacancy time to a minimum, awareness that there’s an extra step that may take extra time to complete before a resident is allowed to move in can save you money in the long run.
Each Time a Property is Vacant
Additionally, some cities require a code inspection every time your property is vacant. Which means, during those in-between times when you’re hunting for a new resident, you may also have to invite an agent in for an inspection. Depending on how that inspection goes and if there are any issues, you may have extra repairs that you weren’t anticipating, which can add vacancy time.
Short-Term Rentals
On top of single family rentals, many Texas cities have strict requirements for short-term rental properties (STRs). In some cities, it’s required to attain a permit or an operating license annually in order to rent out an STR. At the state level, a short term rental is defined as a property rented out for less than 30 days. However, cities have a lot of leeway to set further definitions and regulations as they see fit. In San Antonio, TX, STRs are broken into two types depending on whether or not the property is the primary residence of the owner. If it is not a primary residence, then there is a density limit per one side of the street between intersections that determines how many units can be rented out short-term. If that limit (say for a multifamily property), is reached, then a special exception for the permit is required. Addison, TX requires yearly registration for an STR, but has other limiting factors such as the amount of persons and vehicles allowed to stay on the premises at one time. Again, each requirement varies depending on the city. In these scenarios, it can be time-saving to have a local property management company on your side who understands all of the regulations and proceedings, ensuring that you stay in the clear.
Multifamily Rental Properties
Additionally, multifamily investors may have registration, permitting, and inspection requirements in order to house residents. These obligations differ depending on the city. For example, in San Marcos, TX, landlords need only one registration per complex. However, in Rowlett, TX and Farmers Branch, TX, an annual license is required and the fee is charged on a per-unit basis. For multifamily investors, it’s crucial to understand the local laws surrounding registration and licensing requirements, and plan accordingly in regards to rehab, budgeting, and operating with a property manager.
How to Stay in the Clear as a Texas Rental Property Owner
While it is possible to handle these requirements as a DIY landlord, it can be helpful to have someone with boots on the ground who is familiar with the ordinances specific to your city. This is especially true for out-of-state investors, who in some cases may need a local agent. One of the things our Texas property management offers is expertise. They have the local knowledge to navigate the oftentimes strict regulations and take those time-consuming processes off of your hands, including registration and licensing, documentation management, and more. To prepare properties for inspection time, Evernest has an extensive, vetted vendor network to tackle repairs and renovations that address any deficiencies which may cause a failing grade. That way, landlords save time and money while also knowing their property is meeting safety guidelines. Our team also takes the registration process into account during the rehabilitation period, so issues are being addressed before they cause extra vacancy time. If you’re a landlord who has a Texas property that you’d like to convert into a rental, or a potential investor who’s seeking to buy a rental property, our team at Evernest can handle every step, from start to finish. Contact our Texas property management team to see how they can assist you with your rental property registration.
