Renting out your house can provide you with an excellent source of income, but there are some specific things to consider before you take this step. Ask yourself the following three questions to see if this decision is right for you:
Do you have the time to manage it?
Money earned from renting property may be considered “passive income,” but managing a rental property requires much more action than that term implies. You’re in charge of ensuring that all the essential things in the property are working correctly, and it’s your duty to provide a safe environment for tenants to live in. Here’s a list of some of the responsibilities that come with managing a property:
- Finding tenants
- Writing a legally binding contract
- Collecting rent payments
- Responding to tenants’ maintenance requests if anything breaks or stops functioning
- Caring for your property’s exterior, including seasonal lawn care
- Caring for routine maintenance and inspections
If you don’t stay on top of caring for your property and your tenants, things can get ugly very quickly. You could end up with angry tenants filing a lawsuit, or you may go months without receiving rent. It’s a challenge that requires lots of your attention. So, do you have the time to manage everything?
Are you capable of finding a tenant you can trust?
The secret to a successful rental property lies in the tenants.
Trustworthy tenants will pay their rent on time every month. They’ll look after the house, keep the property neat and tidy, and not cause damages to your house, leaving you with fewer things to worry about.
By contrast, a bad tenant doesn’t pay rent, makes a mess of your house, and can be very expensive in terms of damages, lost rent, and legal problems.
If you’re trying to fill a vacancy quickly so you don’t lose out on rent money, do you have the time to scour applications for the best tenants? Do you know how to successfully advertise your property, let alone vet candidates that apply? How can you tell who is trustworthy and who isn’t? If you don’t know how to find responsible tenants, especially if you’re trying to rush the process, then you will end up with problematic tenants who will only cause you headaches.
Do you know how to get yourself out of a bad situation if things go south?
Let’s say you rent your house out, but a worst-case scenario happens with your tenants and things go very badly—you’re out money, you’re facing legal battles, and to top it off, you have to find new tenants again. You’re in a terrible situation, legally or financially (or both). Can you get yourself out of it?
There are many laws ensuring contracts between tenants and landlords are fair. Unfortunately, they often favor tenants in order to protect them, so you could find yourself making a costly legal mistake without even realizing it. Even landlords with the best intentions and practices can come across difficult tenants or unexpected situations that leave them facing costly legal penalties.
What Are Your Options?
Did you answer yes to all of these questions? If so, then you’re in the perfect position to start renting out your house. If you didn’t, then should you reconsider renting out property?
Not necessarily; you’ll just require some extra help. Hiring an experienced property manager could help you gain control of all these responsibilities. Most individuals don’t have much property management experience, so they lack the time and expertise to look after a rental property and deal with tenants and other issues. Property management companies step in to take the load off your hands. They can deal with everything from finding tenants and collecting rent to caring for maintenance to legally protecting you and your property. So if you don’t have the ability to manage your property yourself, consider a property management company.