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Renting Your Home Is An Option
Because of the
difficult market for home sellers, many homeowners are looking at
renting out their homes rather than selling. Not only are rental
occupancy rates up nationwide, but monthly rental prices are up as well.
If you’re thinking of
taking this path, you’ll first need to consider the possible costs of
renting, the amount of work involved being a landlord, and the
hit-or-miss nature of finding good tenants.
First and foremost,
keep in mind that leasing your home can be expensive so take a close
look at the financial costs of renting. Not only will you have to
fix up your home before (and more than likely after) renting it
out, but you’ll have other costs such as regular maintenance and
property management fees, if applicable. You’ll need to have good cash
flow and plan for worst-case scenarios such as excess damage caused by
tenants. Also, you’ll need to ask yourself this very important financial
question: Will you be able to afford two mortgages if your rental is
empty between tenants?
Being a landlord isn’t
an easy task (especially if you buy a home far away from your rental) so
the smart thing to do is to hire a property manager. A property
manager is essential for several reasons. Not only will a management
company oversee your property on a regular basis, but they can also
handle problems should they arise. Also, a property management company
is well versed in the business side of renting, namely the intricacies
of leases and other legal aspects. Finally, a good management company
will have plenty of connections, not only to goods and services (such as
repair people), but also to potential renters.
Probably the most
difficult part of renting out your home is finding good tenants.
Having good tenants who take care of your property and pay the rent on
time can make the rental process a success while having bad tenants who
don’t take care of your property and don’t pay the rent on time can make
it a disaster. The key to having good tenants is to check their
background thoroughly (or to have your property manager check). If a
prospective renter has had past evictions, has a criminal history, or
has poor credit, you probably shouldn’t consider them as a potential
tenant. Diligence is necessary when screening applicants.
Much like investing in
a house in order to sell it for a profit, you’ll need to treat your
rental home as a business. If you do—and if you plan ahead carefully and
weight all of the pros and cons—you’ll be much more likely to be
successful in renting out your home. ∆ |
