Let’s say you
inherit a house from a favorite aunt or grandparent. You don’t want to sell it,
but you like living in your current home. Or maybe you’re moving out of your
old home, and rather than selling, you’d like to have a longer term profit for
the property. Maybe you want to make a little extra income with your vacation
property when you’re not using it. These are all great reasons to rent out a
property. But renting out your property shouldn’t be done lightly. You need to
consider carefully whether it’s the right choice for your home, and you need to
be especially careful in choosing the right tenant or the decision to rent out
could cost more trouble than it’s worth.
Selling
vs. Renting
First, make sure
renting your home out is really the right choice over selling the home. Some of
the reasons listed above are good reasons to rent the property, but what if
things aren’t that clear cut? Ask yourself a few questions about the reason for
your move and the market surrounding you. Do you plan to return to the property
eventually? If so, renting is definitely the way to go. If you’re deep in
mortgage debt, you may not be able to afford to sell the home, and it may make
more sense to rent it. Renting your house out can also help you appreciate home
value before you eventually sell. Ask a realtor about the rental market in the
area. If it’s strong, renting your home out might help you cover the mortgage
cost and earn a profit.
How
Much to Charge
If you decide to
rent your home out, the next question is how much you should charge per
month...or how much you feasibly can charge in the current rental market. You
can find prices of comparable rental properties in online listings, and even a
few paper listings. However, you want to keep in mind the fluctuation of value
from neighborhood to neighborhood, and the selling (or renting) points of your
own home. Here again, it may help to talk to a realtor for a clearer idea of
what’s realistic.
Background
Checks
You’ll want to be
sure that you find a tenant you can trust. You might click with certain
families when they view the home, but don’t just rely on that first impression.
In addition to their application including employment information, a potential
tenant should be willing to submit to a background check. You can do this one
of two ways. You can run the background check yourself, pulling credit reports
in accordance with the Fair Credit Reporting Act and checking state
and local records for any criminal history. You can also contact their
references and employers. If you don’t have the time or want a second opinion,
you can hire an online background check agency, but make sure they’re reputable
by checking reviews or Better
Business Bureau ratings before hiring them.
Your
Responsibility as a Landlord
But the tenant is
only one part of the equation. You also have to be a responsible landlord. Make
sure you have a written lease detailing your rights with the property as well
as the tenant’s rights. It may be a good idea to hire an attorney to advise you
on the terms. Make sure the property is insured in the event that any damage
happens. And that attorney you hire will also come in handy in the event that
you have to evict a tenant. While no one likes to think about it, even the most
careful tenant selection can still end in eviction, and as a landlord, it’s
important to be prepared for anything.
Like buying and
selling property, renting property out can be rewarding but should be
considered carefully. Talk to an experienced College Station realtor about whether it’s the
best choice for you.
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