Renting Out Your House
It’s not only landlords and real estate investors who see the opportunity of rental property. Many homeowners are intrigued about the idea of renting out their home, or part of it, to help pay their mortgage.
Some are renting their homes out and moving to Florida, Mexico, California or some sunny place and letting their tenant pay their mortgage. They list them on Homeaway or Airbnb and manage their properties remotely. Nice life if you can wrangle it.
More Homeowners Will Become Landlords
It’s the housing shortage along with real estate inheritances that’s creating demand. That’s opportunity. But what about afterward when the economy falters?
Although the economy is strong right now, this era of ultra low mortgage rates, low unemployment, and easy money access could fade away. There are those concerned about a recession too. According to the stats, housing may be in short supply for a long time. That’s why rental property management is such a topic of interest to many.
Regardless of the economic scenario, rising mortgage rates will force hundreds of thousands of home owners to consider renting out their house in order to keep themselves afloat financially. A generation of new landlord software users is upon us.
Let’s Divvy Up that House!
We’ve seen many of these shared living arrangements in the inner city with larger older, century houses. They’re huge and partitioned to accomodate an astonishing number of tenants living in them. Your house might consist of 2 to 3 floors which with some renovation, and allow you to create three apartments. That could work well for you.
In a way, these rental apartments help with the housing crisis and create affordable housing units. Lot’s of people are doing this, but there are costs and perils of renting to others. You may have to look at this as a business, to keep the finances straight, stay legal, and get some tax breaks.
There’s 5 Basic Elements:
- Is it rentable and how can you make it so?
- How much will this cost?
- What is the projected rent income?
- What are the rental housing laws?
- How will you do the landlord work?
With these 5 questions answered, you can dig deeper into the opportunity.
12 Ways to Get Organized
The home rental planning process can be fairly simple. Asking questions is still smart though. Let’s list the steps in a series of questions:
- does your local building codes/bylaws allow for apartments in your house?
- how many units can your home be safely divided into?
- what will the renovation costs, extra taxes, fees, and maintenance costs be?
- what features will be needed to make it rentable (sound insulation, heating/cooling, flooring, bathroom fixtures, etc) ?
- how many appliances, fixtures, and entry doors will be needed?
- how many parking spots will you need?
- what will the electrical/plumbing upgrades cost?
- how will you advertise and screen tenants?
- how much rent will you have to charge to break even?
- can you write a lease that will protect you legally and allow you to evict them if necessary?
- how much insurance will you need with this extra tenant?
- is there a property management software that will help you create accurate financials so you know clearly your return on investment
You’ll want to learn more about your city and state landlord tenant laws, fair housing act, and lease agreements. That’s the legal side of it. Want to know more? Check out our property manager specialist’s tips on lease management, lease terminations, tenant evictions, and legal documentation.
Renting and Managing
The other side is how you’ll rent it out. If this is a permanent rental apartment, then the cash flow is predictable. If it’s an Airbnb type rental, then it can get more complicated and detailed.
Yes, becoming a landlord might offer more benefits than you ever imagined. It’s a golden opportunity that comes with legal responsibilities, financial strategy, and landlord management demands. If you’re about to make it come true, get some guidance from someone who is already managing a house rental. Check off all the details you need to know about.
This could be a pivotal decision for your future. Good luck with your plan and the investment.