Many people mull over the idea of renting out their homes in a down market. They may want the benefit of extra income to save money or pay down bills. They may also choose this method as a way to wait things out until the economy improves. The motives are plentiful but it’s possible for this plan to become more trouble than it’s worth when appropriate considerations aren’t made. Here are five steps that’ll get you going in the right direction.
Understand the responsibility involved
First, you must determine whether being a landlord is an obligation you can handle. The benefits of renting are numerous, such as the ability to deter the vandalism that often plagues an empty home, the ease of tax breaks and the ability to generate income that covers the bills and possibly even creates a profit. However, being a landlord is also one more responsibility you’ll need to fit into your life. It’s safe to assume that things will sometimes fail to run smoothly. You’ll need to stay on top of repairs and maintenance, collect rent and even check whether there are bathroom sets for sale in order to properly kit out the home. Dole out more for your home insurance policy and try to avoid creating a less appealing home for potential buyers by keeping an eye on your tenant’s housekeeping skills.
Prepare your home
In a down market, you won’t be able to get away with renting out the home as is. Tenants are more attentive and choosy in this market because of the increased availability of rental homes and their expectations are much higher. Prepare for the new tenant by thoroughly cleaning your home and making sure all appliances are working and are in good condition. If you’ve decided that you’re renting out a room or area within your house, make sure that you can secure that area from the rest of your home. Once the house has been straightened out, develop a list describing what makes the house appealing. Take note of those commonly desirable features such as a washer and a dryer, air conditioning and garage. Use rental terms to help sell the property.
Set a competitive price
Set the cost of the rent by learning what other rental properties are going for in your community. Remember, potential tenants will be scouting around for deals, so set the rent at a competitive price and make sure you highlight all the most valuable aspects of your home.
Screen tenants carefully
Start looking for a tenant as soon as your property is ready to be shown. Then, choose your tenant very carefully. You need to be able to depend on this person to pay the rent on time and to keep your home in good condition. If the person is someone you may be cohabitating with, learn their habits so you won’t run into any nasty surprises. Gather references for potential tenants and check their credit histories. You should also take safety precautions when screening a tenant – after all, the person is a stranger. Once you’ve found the right tenant, ask for a reasonable security deposit and arrange an appropriate payment schedule.
Renting a home to a potential tenant during an economic slump is beneficial for both parties – but only if homeowners takes the time to address and prevent the potential pitfalls of this option. After all, it’s your home.
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