We all know that mortgages can be a huge financial burden. With all of the other costs of living that need to be taken care of, it is challenging to also handle the costs of owning property. While you may have a good mortgage structure in place that is manageable each month, the idea to rent out the property—especially if it has additional space or if it is vacant for part of the year—is very appealing.
Certain mortgage structures, like a home equity conversion mortgage, are offered to older homeowners who have accumulated equity and can ease the burden of the monthly bills. But for new homeowners in today’s housing market, it is viable and even wise to turn a property into a long-term investment by any means possible, and renting is a good starting place. Before you are prepared to find the right tenant for your property, here are 4 considerations to keep in mind:
Realize the Responsibilities
First and foremost, you should determine whether you are able to take on the obligation of being a landlord. In order to have success in renting your home, you will need to manage the property and stay on top of repairs and general maintenance. The responsibilities that come with renting out your home or second property are not minor—you will need to collect rent, spend more on home insurance, and draw in renters by keeping the home up to par with your neighboring competition.
Prepare Your Home
If you are capable of all of the responsibilities, the next consideration to make is how you will prepare the property for renters. In a down market situation, you will not be able to rent out the home as it stands. Tenants are increasingly attentive to being selective in a down market because there will be many rental properties to choose from. Beyond cleaning the home and making sure appliances are in working order, you will want to note the most desirable features and use them to your advantage.
Hire the Necessary Professionals
A third consideration before renting out your property is whether you need to hire certain professionals to process certain legalities and taxes. Talking with an attorney or other professional will help to ensure that you are complying with tax and local property laws by consequence of the property’s new rental status. Attorneys can also make it easy for you to navigate the landlord-tenant laws in place, which vary by state.
Set a Competitive Price
A final concern to keep in mind is the price you are going to charge to rent out the property. Doing the appropriate amount of market research on the costs of other rental properties in the area is a great way to ensure you aren’t setting your price too low or too high. Know that most potential renters are looking for a deal, so you will want your property to have a competitive price that speaks to the property’s amenities and valuable features.
Before renting out your property and searching for tenants, you will want to be aware of the responsibilities, assume the proper preparations, determine your price, and learn about the potential legal issues.