We are in the process of downsizing by purchasing a smaller home nearer family and then renting our current home. We have never done something like this before, but there is a first time for everything! If this is something you are considering, here are five things to remember when considering the possibility of renting your home.
1. Calculate the total cost of keeping the place going: including mortgage payments, utilities, maintenance, yard work, repairs and any professional services you'll need, which could include property management, tax help, and a legal consultant. Perhaps you will be using the rental as a weekly or monthly rental. In that case, you could seek the help of a decorator. If you chose to furnish and decorate the rental yourself, you can use home decorators coupon.
2. Estimate your rent price. A competitive rent price reflects prevailing rates, so simply adding up your cost of ownership won't do. Check newspaper ads, call property management agencies and look at online classified ads.
3. Compare the rent you think you can get with your costs. Calculate two profit-and-loss statements: a best-case list and a more conservative one that includes all the things that could go wrong.
4. Screening. Your rental application should elicit an applicant's full identity, rental history and credit picture. If you are going to perform a credit check, disclose that on the application and ask applicants to sign a release agreeing to this.
5.Handling Money. Keep rental-business records separate from your personal accounts. You can deduct mortgage interest, property taxes and expenses related to the operation and rental of your unit, such as professional services (cleaning, painting, accounting, property management, yard care), supplies (paint, equipment, lumber, appliances) and travel in the service of caring for the property,
If becoming a hands on landlord scares you, you can always Outsource: When you add up the responsibilities, there's much to be said for hiring a professional. Going this route will cost you about 10% of the monthly rent collected.
For now, we will be handling everything.
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6 comments:
Sounds like an adventure to me! Many people have asked me if I'm going to rent out the house we bought in PEI until we are able to live there full time. I just don't know. We are so far away to be landlords so if I decide to do it I would go with a professional service like you mentioned. 10% doesn't sound too bad in my situation. Something to think about. How is the house hunting going?? I know you said you had found a couple of likely houses.
Please please please be careful when your tenants complain about anything like heat or water.
You might end up with more maintenance costs than expected as well, especially if they are expecting a certain standard. Then again, you're probably not the slumlords I've dealt with in the past so.. :)
FB... we will be careful to listen to our tenants and respond promptly. I hope I can treat them as I would want to be treated.
Also, be wary of potential tenants who have really, really crazy eyes! They will be high maintenance for sure!
Will definitely be watching out for crazy eyed potential tennants...Lol!
Before you even begin looking at apartments or homes, make a list of what features are most important to you. If you are a student, consider the distance from the apartment to campus. If you are signing on with a roommate, how many bedrooms and bathrooms will you need? What about on-site laundry, parking, or a pool? Knowing what is most important will help you narrow the search, though all renters should keep in mind that their budget may not allow for everything on the list. Go with the most important features, and be willing to compromise on the rest.
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