When it comes time to relocate your family, it can feel like your only option is to list your current home for sale, compete for the highest price, and accept whatever the market has to give. However, in some cases, there is another option. You could make your house a rental property.
There are numerous reasons why you might consider renting out your primary residence, each with its own set of advantages. Perhaps you have tried listing the house for sale but aren’t getting the desired price. Perhaps you need to relocate quickly but do not want to lose the home. Maybe you just want to shake up your finances and add a second source of income as a real estate tycoon.
Here are some things that you will need to think about.
Have you got the right insurances in place?
Once you have determined that you have a suitable mortgage for your property, you will want to ensure that the house is properly insured and that your family is adequately protected from liability. Landlord insurance is more expensive than standard home insurance for the same reason that mortgage rates are higher – rental properties see much more wear and tear!
How much rent will you charge?
Now that you are completely protected, the fun can begin! You began this journey in order to earn rental income, and now you get to decide how much you want to charge. The standard landlord response is, of course, “as much as possible ” But how do you know what the correct amount is? Conduct some market research. There are numerous free resources available to assist you in determining what rental rates look like in your area.
Consider your expenses. Make sure to leave some profit over and above the costs of running the property. If you have a mortgage, your profit will most likely be small but keep in mind that every rent payment contributes to the property’s equity, so your profit will shoot through the roof once the mortgage is paid off.
Speak with property rental agencies. Talking to a real estate agent is the simplest way to get a good idea of what a property should rent for. Knowing what you don’t know and being willing to ask for help is one of the most important rules of investing. A good real estate agent will be able to show you the best comparables, provide you with an achievable range of rental rates, and even assist you in finding a tenant more quickly.
Lay down the laws
This is your first lesson in being tough. If you want to be the understanding, pliable landlord you never had, you are going to have a difficult time. People will take advantage, and if you allow them to pay their rent late without incurring a late fee once, they will believe they can do it again the following month.
Determine what you are willing to allow on your property and what must be strictly prohibited. Make certain that the rules are both clear and universal. Making decisions on a case-by-case basis may result in discrimination lawsuits or a tenant who constantly comes to you with requests for exceptions to your guide lines.
