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Renting Your Home
There are many reasons why homeowners choose to get into the
rental market. Many choose to rent out their homes while waiting for the
market to improve. Some homeowners want to generate rental income from a
second home or vacation property. Still others find themselves with multiple
properties in hand after large life events, such as marriage, relocation, or
inheritance.
Regardless of the reasons for getting into the business of
renting properties, it’s important to get started on the right foot. That
involves asking yourself some hard questions, doing your research, calling in
the experts, and even putting in some elbow grease to get your property ready
for the rental market. Here’s a quick guide to what’s involved.
Mull it over
Owning a rental property is much more than just collecting payments every
month. As a landlord, you are legally responsible for providing a safe,
livable home for your tenants, as well as maintaining the property with
timely repairs. Consider that owning and maintaining rental properties is
running a business. Ensure that you have the time, resources, skills, and
patience for the often-unpredictable nature of the industry.
Do your research
Take a long, hard look at your rental unit and write a list of its
attributes, including square footage, neighborhood, number of bedrooms and
bathrooms, amenities, and yard size. Then, search for comparable units online
to get a good idea for how much you’ll be able to charge.
Number crunching
Once you know how much you’ll be able to charge for your rental property,
consider additional costs, such as the increased price of homeowners’
insurance, the cost of maintenance and repairs, unanticipated damage by
occupants, carrying costs between tenants, and advertising, to name a few.
To outsource, or not to outsource?
If you are interested in renting your property, but don’t want to fulfill the
role of landlord, consider hiring a property management company. In exchange
for a monthly fee, property managers will find and screen tenants, serve as
the main point of contact for occupants, manage repairs, collect rent
payments, and tackle other duties.
Consult a lawyer and accountant
Rental income must be reported on your taxes, but some expenses may be tax
deductible. Consult a qualified accountant to explore the potential financial
gains and losses that come with renting property.
Additionally, consult a real estate attorney in your local
area. While you may be able to find sample rental contracts online, a lawyer
who is familiar with laws and regulations in your local area will make sure
that the lease agreement your tenants will sign is legal, appropriate, and
protects you in case of unexpected events.
Prepare the property
Lastly, get the property itself ready for listing. This can mean tasks as
minor as removing your personal belongings, or more substantial improvements
like upgrading appliances and painting. If you’re utilizing a property
management company, ask them for tips on how to get your property rental
ready.
With good preparation, consultations from experts, and an
honest look at the finances involved, homeowners can find renting property to
be a beneficial way to increase income, delay selling a home until the market
improves, or cover costs associated with owning multiple properties.
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