A rental property can be a good means of reliable extra income and a strong long-term investment. It can also be a stressful venture when dealing with all of the details and legalities of owning someone else’s living space. From maintenance to less than ideal tenants, to becoming responsible for the condition of the home, there are many things to consider when becoming a landlord.
Some homeowners entertain the idea of moving to a new home but retaining ownership of their current home and turning it into a rental property. Here are five of the biggest things homeowners who have done this wish they knew before they became a landlord.
Truly consider the ability of your home to for renting
When many people think about turning their current home into a rental property after moving into a newer one, they do not think about the desirability of their home as a rental. After all who wouldn’t want to live here? You loved it and still do.
But not every home is a prime candidate as a lucrative rental property. You have to think in terms of what a renter would be looking for. And it could be a good idea to ask a local real estate professional what most renters are looking for from single-family properties in your town.
For example, they could be looking for a home that is within walking distance of public transportation. If your home is more than a mile from the nearest bus stop, this is not going to be a favorable rental amongst a majority of renters. If the majority of renters in your area do not own automobiles.
Make sure that you have the financial means to budget for vacancies
It is not uncommon for rental properties to sit empty for at least one or two months in between tenants or when you are first starting out trying to find a tenant. No tenant means no rent money being paid and the rent money covers the cost of the mortgage on the home. You want to ensure that you are financially able to pay for both mortgages at once should your home sit empty.
You also do not want to only account for the possibility of your home being vacant for just a short period of time. It is always wise to have several months’ worth of second mortgage payments available should you run into a hardship where your home sits vacant for a long amount of time.
You do not want your rental property to cause you to have to sell both of your homes to make up for missed payments.
Decide whether you will hire a property manager
Many homeowners are unaware of every detail that a landlord is responsible to provide to a tenant for a safe living atmosphere. This is why several landlords choose to hire property managers to take care of all of these details for them.
Upon discovering the rental property manager option, however, some homeowners do not think about the need to define the exact rule of their property manager. If you hire a property manager you will want to make sure that your account for the cost of hiring one and if your rental will continue to bring in profit after paying them. You also want to make sure that the property manager has been well communicated with you on your expectations of the jobs you want them to carry out.
Make the rental agreement as communicative as possible
The less detail you include in your rental agreement with your renters the more headache you will have. Your goal in the rental agreement is to provide clear and concise expectations of the usage of your home. Leave no room for interpretation of what is expected in the day-to-day operations of using your property.
Learn the landlord balance
When providing a rental home for a stranger you want to make sure that you are treating your new renter as a human being while not communicating that they can take advantage of you. You want to find that balance between being a landlord that your renter wants to continue renting from while keeping a professional business relationship that communicates you expect them to be responsible with your home and pay the rent on time.
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