Posted In:Buying, Home Improvements, Home Maintenence, Real Estate, Real Estate 101, rental property, Selling, Uncategorized
Owning a home can be a great financial decision, especially if you have the option to turn it into a rental property. If you are looking to rent out all or part of your home here are some of the realities of becoming a landlord.
Repairs and Maintenance
Home ownership is going to come with annual maintenance fees for your property. You will need to set aside this additional money and be prepared to use it at anytime. Maybe the dryer breaks or worse, your basement floods, these are big expenses you need to account for tenant or not.
Some renters will leave your property a little worse for wear than others. Have you done your due diligence to screen your tenants? When it comes time for those tenants to move out you might be horrified to find holes in your drywall, stained carpets and unfortunately in some cases this might be the least of your worries. Destructive renters are an inherent risk you take on as a landlord. It is extremely important to do regular walk throughs to keep tabs on the condition of your home.
Most people who have had a rental property will most likely have a frightful story to tell about their experience as a landlord. As an income property owner you take on the risk of bringing strangers into your home. You might have tenants who are noisy, destructive or don’t pay their rent.
On the other hand you may have great tenants, treat these people like gold and don’t invade their privacy. Use your instincts and appreciate the good tenants you do come across.
Here are several scandalous stories of Airbnb rentals.
Some tenants will consistently pay their rent late and if you let it become a habit this can go on for months even years. Start out with good routines like doing walk throughs with your tenants every few months, this is also helpful for your tenants who will know when to expect you.
Have a strong contract set in place from the beginning so their can be no room for miscommunication. This will save you oodles of time stressing about little things that arise.
It’s important to know from the start that renting out a property is not going to be an immediate goldmine. Some years you might not even break even dependant on maintenance fees etc. Also be sure to keep your eye on rising mortgage rates and property taxes so you can adjust annual rental fees as necessary.
Time is money and renting out a property can sometimes be like having a second job that cuts into your free time. You will spend many hours finding and interviewing tenants, setting up viewings, cleaning, maintaining and up keeping the home.
Make sure you have a plan in place. Be sure the monthly rent will cover the mortgage payment as well as any unknowns.
If you are renting out a portion of your home make sure the suite is legal. Everything should be designed to code to avoid any issues. If you have tenants in a basement suite and they start a kitchen fire that burns down your home this will not be covered by insurance and you will be left without a home and potentially owing the tenant for lost or damaged possessions. It’s very important you have the right permits in place to have tenants. Don’t put yourself in a position for a fine or even a lawsuit.
It is also important to know your legal rights as a homeowner, if you are renting your home as a vacation getaway on sites like Airbnb or vrbo.com.
Scams are very prevalent in today’s society and their are many people out there who know exactly what they’re doing and how to get away with it. Stolen credit cards, identity theft or dishonest people can manipulate you and make it very easy to get away with stealing from you and living in your home rent free.
Online sites take advantage of the fact that you can’t actually meet people face to face. Be aware that as a landlord you can get scammed at any time.
There are many articles you can use to educate yourself on the rules of a rental property. Here is some advice from CNBC.com.