Renting out a home is a great way for homeowners to earn some extra income. Some homeowners rent their homes in an attempt to wait out a sagging housing market, while others see renting their homes as a long-term commitment to their financial futures.
Being a landlord has its advantages and disadvantages, and the decision to rent out a home is one that homeowners should not take lightly. The following are a handful of factors homeowners should consider as they try to decide if renting out their homes is the right move for them.
Being a landlord is a 24-7-365 commitment, as tenants will expect their landlords to be on call at all times. Tenants will call their landlords should plumbing fixtures suddenly burst in the middle of the night, and landlords must be available to answer such calls no matter how inconvenient they become. If you are not willing or able to devote the time necessary to tend to tenant needs, then being a landlord may not be for you.
Whereas homeowners may be able to delay making certain repairs in the homes where they lay their heads, such a luxury is not afforded when they are renting out their other properties. Repairs and maintenance of rental properties cannot be put on the back burner while you save money to fix them. In addition, if even minor repairs typically pose a problem for you, you may soon discover that hiring a handyman or discounting rent for live-in supers is cutting into your profits or making it difficult to pay bills. Before deciding to rent out your home, determine the potential costs of maintaining a second property and use that information to decide if renting the property is a sound financial investment or one that might put you in the red.
Many people who have rented have a horror story or two about an absentee or indifferent landlord, but landlords also have their own such stories about nightmare tenants. When mulling whether or not to rent out your home, consider who your prospective tenants will be and if your community will supply the steady stream of renters you will need to pay your mortgage and bills without jeopardizing your finances. The last things first-time or even experienced landlords want are tenants who cannot pay their rent and/or those who are disrespectful of their neighbours and their landlords, so it’s best to give ample consideration to your potential pool of renters before deciding to rent out your home.
Many landlords work with local real estate agencies or property management firms who will do much of the legwork with regard to finding tenants and maintaining properties. Research the cost of such help to determine if you can afford it and still make renting your home financially viable.
Lawyer fees are another cost prospective landlords must consider. Landlord-tenant laws can be difficult to decipher for first-time landlords, so it helps to have an attorney who can help you decipher these laws and how they should govern your actions as a landlord.
But lawyer are not inexpensive, and they must be worked into your budget as well.
Renting a home is a great way to earn extra income, but homeowners must consider a host of factors before putting their homes up for rent.