Should I Rent My Home Instead of Selling It?

When it comes time to move, some homeowners strongly consider renting out their current property instead of selling it.  

It makes some sense - there has been a lot of writing done about how buying a home is ultimately cheaper than selling one, and so renting out a property you already own seems like this would be a good opportunity to generate more income.

It isn't bad, at face value.  Becoming an investor, however, is more work than many homeowners realize.  Here are 10 questions, courtesy of the KCM blog, that you should ask before you decide to rent out your home, rather than sell. Of course, it takes a certain kind of personality and risk tolerance as well.

  1. If your tenant says they can't afford to pay the rent this month due to other obligations, how will you respond?  This is most common during back-to-school time and holiday seasons.
  2. What percentage of tenants do you think can't afford to pay their rent?  Many homeowners cannot afford to make their mortgage payments either, in this economy.
  3. Have you found an eviction attorney that you can trust, in case you do have to deal with a challenging tenant?
  4. Have you talked to your insurance company about a possible increase in premiums, due to liability in a non-owner occupied home?
  5. How do you feel about pets? Cats? Dogs? The size of the dog?
  6. How will you collect the rent? Mail, in person?
  7. As a landlord, repairs are a big part of your responsibility. How will you handle repairs?
  8. Do you have a complete list of workmen to call when repairs do come up (plumbing, A/C, heat, appliances, fixtures, etc.)?
  9. When will you perform inspections of the property?
  10. Will you plan on alerting your current neighbors that you will be renting out the property?

In other words:

Being an investor has great benefits, but it is not without challenges. Make sure you are prepared to handle physical work, legal work, and that you have a set amount of money already set aside to help care for the property (and you can also review this list to see if being a landlord will suit your lifestyle.)  The bottom line - make your property an investment property if you want to be an investor, not just because you want to postpone a sale.

Real Group Real Estate

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