If you are a home owner who is considering renting your home as an alternative to selling it at a reduced price so that you can hold onto your investment, there are some important considerations that need to be addressed. Whether the goal is to “buy up” at a more affordable price or to help you through a tough economic situation, following are some important tips to contemplate before you actually rent your home to someone.
1 Work with a Real Estate or Property Management Company. While it does involve paying the company 5-10 percent of the monthly rental rate, it is worth its weight in gold to consider this option out of the gate. Being a landlord is an arduous job that requires attention at any point or time of the day (and, yes, even at 2am). For anyone who has another full-time job, is moving out of town or really has no desire to handle the daily issues that arise, working with a real estate or property management company puts all of the burden on professionals who are experienced at managing rentals and know the entire process of renting property. Real estate professionals also know where and how to best advertise your property so that you get the best potential renters.
2 Prepare Your Home. This is one of the most important considerations in the rental process. With so many home owners and real estate investors in the market, it is imperative to stand apart from the rest of the pack. Renters have become quite savvy over the past few years and expect a little more out of their landlords in terms of quality. Because of this, it is important to make sure your home is in pristine condition. In terms of updating, unless you recently did so, take a weekend and repaint the inside in neutral colors. A fresh coat of paint does a great deal to make a home look better. Other updates which you need to consider are getting new appliances and even new carpet or flooring. Seriously – do you want your home to be passed over in favor of another because it has new appliances?
Should you decide to forego the use of a real estate or property management company in favor of doing it yourself, the next three tips are for you. Pay attention because these are important.
3 Enlist help from professionals. Be sure to work with real estate attorneys and tax professionals to make sure you abide by local and state rules and regulations regarding rental property. For tax purposes, it is so much better to work with an accountant to properly report rental income as it is considered part of your gross income with your tax records.
4 Decide on a realistic rental payment. This one requires thought and research. It is necessary to research comparable rental properties in your neighborhood as well as surrounding community so that you are competitive with them. On top of that, and more important, it is necessary to be objective about the whole thing. While the goal is to cover your monthly mortgage payment, you need to make sure that it is not way out of the range when compared to other rentals in the area.
5 Perform background checks. Knowing everything about the people who are living in your home is very important. Thorough background checks as well as credit checks provide a wealth of information to help select the best tenants. The main things to take away from background checks are that all previous rental payments were on time, the candidates have no repossessions or
convictions that might raise a red flag and references from previous landlords and others are favorable.
Turning your home into rental property is definitely a consideration for home owners if the situation dictates it as an option. If you decide to go this route, take time to go over these tips and either, you may learn that this is something that you enjoy and see as a worthwhile endeavor for additional income or simply a short term fix until the real estate market rights itself making your home sellable.
Chase Heckendorn is the owner of local real estate company in Dallas, TX. To learn more about his services, check out his website at dallastxlofts.com.