Long-Term Rental of Your Home?
Could long-term rental of your home be an alternative to selling? Selling a home is often a simple, if not painful, fix for property owners with challenging circumstances. But aside from the costs of selling a house, letting your home go permanently can be difficult. Renting long-term, on the other hand, allows you to keep your home without taking a financial loss. Could making your home a long-term rental be a smart step? Learn how to turn your property into a long-term rental with the ideas below.
Do Your Research
Every rental market is different, and listing your home at the wrong rent amount could cause it to sit vacant. Before listing, monitor real estate prices to see how quickly properties move and what features they offer.
Settling on a price point is the first step in determining whether long-term renting is the right fit. Next, you want to be fair to tenants, cover your own costs, and compete in the rental market. Finally, property owners must abide by state or local rent control policies, like those in California and Oregon.
Make Sure the Math Works
There are a few “rules” for rental profit margins, but every situation is unique. For example, some sources suggest renting is only worth it if you charge 1 percent of the purchase price. Therefore, it would be best to consider other factors in your decision.
For example, if the property is in good repair and you can cover the mortgage with the rental payment, renting could be a way to maintain ownership even if you can’t afford to live there currently. However, if you’re looking for a higher return on investment, your rent must be much higher than the mortgage payment.
Understand Tenancy Laws
Renting your home may sound like a simple solution to financial challenges. With a tenant in place, however, the stakes are higher. Renters have rights in all states, points out Law Help, and in some areas, a person can be a tenant without a written contract.
For example, you must give sufficient notice before visiting the property. In addition, all states have laws on evictions, often with waiting periods and legal requirements for property owners. Thoroughly vetting your applicants, following federal and state law, can help avoid some issues, but having a plan for difficult tenants is also valuable.
Should You DIY or Hire Help?
Many property owners hire property management services for their rentals. With a single rental, deciding whether to hire help depends on your capacity to handle the rental, the per-month profit margin, and other factors.
According to Thumbtack, on average, property management costs $99 monthly, $69 on the lower end, and $225 on the higher side. However, the range of services will vary based on cost and other factors. For example, some companies may offer marketing services, whereas others will only collect rent and handle tenant concerns.
Market Your Property
Whether you hire a property manager or not, marketing will be crucial to renting your home. You or your agent will need to arrange for photos, list the property online, answer questions from prospective renters, and more.
You can market your property online through various services (at a cost), but in-person efforts can help, too. For example, you could create business cards with your information and property details. Using a premade template means the process is simple, but you can customize your cards.
Choose the Right Software
Even with a single rental, you’ll have a lot of paperwork to maintain and information to store. You’ll also hold tenants’ private information in your files.
Look for software solutions that store info, offer digital tools like e-signatures and email workflows, and integrate with other apps. The right tools can make being a landlord easier and create a better tenant experience.
Summary
Becoming a property manager may not have been part of your homeownership plan. Yet creating a long-term rental can help you break even on a mortgage and earn extra income. Of course; the best part is that you retain ownership of your property and can move back later if the stars align.
Need help learning how to solve your business’s accounting technology needs and selecting the right software for accounting or CPA Firms? Visit us at k2e.com, where we make sophisticated technology understandable to anyone through our conferences, seminars, or on-demand courses.
