Is Renting Out Your Home a Good Idea?
The question, is renting your home out a good idea? Theres many different reasons of why one would want to rent their home out, and theres various ways to go about it. In this article we will try to outline some of the pros and cons of each and provide insight as to why renting your home out may or may not be a good idea.
First, theres different reasons as to why someone would want to rent their home out. Have you tried selling your home but it sat on the market too long and you now are considering renting it out and bringing in some extra cash? Are you considering renting it for one term, say a years lease, or month-to-month? Realize that if you rent your home and the tenant signs a lease, then your home is tied up during the period that the lease runs, which is generally for one year. You might find someone wanting to rent for only six months maybe they're in town for a work assignment or maybe they are building a new home and need a place to live for only six months. Either way, your home is tied up in a lease for the period so keep that in mind.
Secondly, theres various ways a property owner can go about renting their home. They can look to rent to a friend, or a stranger. They can rent the property unfurnished or fully furnished with furniture, dishes, bath towels, shower curtain, sheets, the works. The property can be rented to multiple people, such as students wanting only to rent a single bedroom. A property owner can rent short-term by-the-week vacation property if it's near a lake, ocean, resort, golf course, water, etc. A property could be rented using an online service like AirBNB, or VRBO for example. A property owner should decide sooner than later how s/he plans to approach the idea of renting a property out. Maybe you only want to rent out your basement, but keep in mind you have someone living there that you don't know too well and they are cooking, have visitors and potential to own things that are dangerous or have bad habits that could affect the part of the home you decide to live in.
Then last, we outline some of the pros and cons of each route you may want to take, that is, to rent or not to rent. Obvious pros are the extra income and the cons are obviously the headaches and horror stories of rental properties sometimes produce. But, a property owner needs to dive deeper into the pros and cons of owning and managing rental property. You need to ask yourself, do you want to be a landlord, or do you want to hire a property manager to manage the property? The pros of the idea of renting your home out can also be to ride out a real estate slump, or perhaps you plan to return to the area one day and don't want to sell your home quite yet. Or maybe its a home that has been in the family and you're just not ready to part with it but don't want to see it sit empty since it's an expense and things tend to go downhill when homes sit empty. The extra income can be nice for sure but you need to stop and ask the hard questions, how would you react when someone damages your property? What would you do when someone is living there yet are two months behind on paying their rent? Are you prepared for the expenses of insurance, real estate taxes, what about maintenance and repairs? Sometimes properties are not metered separately and an owner has to pay the water, sewer, trash, and power in full and then hope (plan ahead) that the rent income provides for enough positive cash flow. These are some things that property owners tend to overlook when they think of the income first. Other "cons" or negative things to think about is that you're tying up assets and equity that could be used for other purchases such as another home or college expenses. Other "pros" or positive things would be the tax deduction on rental property that you can take for depreciation come tax season. All are things one must stop and consider when thinking about renting their home out.
In summary, the thought of should you rent your home out or not boils down to really where you are financially, the amount of time and resources you have handle what it takes to manage a rental, and your short-term as well as long-term goals. With that in mind, realize that everyone's route or decision may be slightly different when it comes to the decision of to rent or not to rent.
If you would like help managing your property, please consider hiring an experienced property management company such as WFLP Property Management. A good property manager is well worth the cost. Things like legal issues, evictions, holding and managing security deposits, performing inspections, maintenance, collecting rent and calls from the tenant are all valid reasons of why you would want to hire a property manager. Many people feel that they are going to lower their income by paying a property manager, yet most discover that they end up making more money in the process. This is due to various reasons such as tenants will tell a property manager things that they won't tell a property owner, lower cost of repairs since property managers work directly with sub-contractors on a regular basis and get the best price on maintenance calls, and property managers (good ones) know exactly where to advertise your property and to a larger pool of potential tenants garnering the best tenants that are qualified through a proper screening process, and getting the best rent for your property. One idea is, try it for a year and see how you like having someone manage your property. If you don't see the results, try another property manager or simply take the management back over yourself.