You are a homeowner, but now your family has simply outgrown the place. You’re almost ready to start hunting for a new home—but hesitate. The fact is, you’re reluctant to give up your present property. It’s been a terrific home, and you suspect it’s only going to grow in value…
If your financial fortunes are on the upswing, you may be wise to consider the viability of renting your home. After all, using it as a profit-making venture even as you expand your real estate holdings might just be doable!
Many a successful landlord has begun that way, and find it every bit as rewarding as they’d hoped. Renting your home sounds like a straightforward proposition in the abstract, for sure: recruit a reliable tenant, then sit back and let any remaining mortgage payments take care of themselves. And it can be a fabulous plan—but like all successful enterprises, is most likely to reward those who prepare. If you are entertaining the prospect of renting your own area home, here are three questions you might ask yourself as you make that decision:
How’s Your Nest Egg?
The transition from residence to rentable home can take a fair amount of cash, even in a well-maintained property. You’ll want to capture top dollar anytime you rent your home, so any hint of potential roof leak or unsafe walkway needs to be eliminated. Realistically, this might be the time to upgrade the kitchen and re-tile the entryway floor. While you pencil in those costs, prudence dictates that you plan for fallow rental periods, too. While it’s possible you might find a suitable tenant as soon as you begin renting your home, you should budget for some months when that doesn’t happen.
How’s Your People-Meter?
Seasoned landlords all have war stories to tell: the presentable young couple who turned out to be non-stop party hosts for less-than-presentable friends, or the roommates who wound up playing host—or subleasing—to quite a few unauthorized friends. Before you begin renting your home, ask yourself if you’ve looked into exactly how you plan to recruit and screen tenants. You’ll want to highlight the features most likely to draw the best applicants, and advertise in outlets they visit most frequently. And while you’ll want to trust your gut instincts, you’ll need to do a bit of homework to be sure you stay in line with all fair housing laws—even if it all means your house might sit vacant a little longer.
How Much Time Can You Spare?
Late nights; vacations; rainy days—a rental can require attention on its own schedule, which doesn’t always match yours. When you start renting your home, you need to be able to invest a certain amount of your time. You will be adding the upkeep of another household, and as you already know, that does require diligence. If your spare time is already in short supply, the realistic answer will be to hire a professional property management company. If adding their fee means a bottom line that’s close to the break-even point, your decision will become one about whether expanding your real estate holdings (rather than profit-making) will be reward enough. Whatever your decision, I’m here to help you further all aspects of your real estate endeavors!