The Reality of Renting Your Home

The Reality of Renting Your HomeMany homeowners are hesitant to make a move and sell their home, especially when it seems like a financially effective move to rent it out instead. It makes sense where this mentality comes from, as renting out an already-owned property seems to be a good way to pay off a pre-existing mortgage, or generate income on a home that is paid off.

Becoming an investor isn't a bad idea, on the surface. It is important to know that becoming an investor takes a particular kind of personality with the means for risk tolerance. Go through this list to prepare yourself for very common occurrences for landlords and investors.

Your tenant can't pay the rent this month.

This is a common occurrence especially during the holiday seasons, and you need to be prepared mentally, fiscally, and legally. If your mortgage payments are intrinsically linked with your tenant's income, you may find yourself in a financially tricky situation if this comes up.

Your tenant needs to be evicted.

Challenging tenants happen. What will you do in the event this needs to happen? Make sure you have found an eviction attorney that you can trust.

Your tenant leaves the home in poor shape at move out.

We see this all the time - almost every time.  And the home owner doesn't anticipate needing to spend $2000 on paint and repairs to get the home market ready for re-rent or sale.  Most of this is considered "normal wear and tear", which is to say it doesn't allow the landlord to take the cost out of the security deposit.  And in Chicago, we really discourage collecting a security deposit to begin with.

You have an increase in premiums.

If you have not yet talked with your insurance company about an increase in premiums, be sure you look into this to ensure this will not be a problem for you. There is often an increase in premiums due to the liability of a non-owner occupied home.

Your tenant has pets.

How do you feel about pets in your home? Dogs? Cats? The size of the dog? This decision will determine the type of tenants you will attract. Know that rentals which are not pet friendly have less of a draw.

Your unit needs extensive repairs.

This is a big part of your responsibility as an investor and landlord. Tenants expect repairs to be made in a timely manner. Make sure you have a list of workmen (plumbing, A/C, heat, appliances, fixtures, etc.) lined up for needed repairs.

Your tenant tries to contact you 24/7.

That is, of course, unless you hire a management company to field inquiries. Emergencies do come up, or perhaps you have an overbearing tenant. Prepare for these scenarios and have a strategy in place.

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.


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