Property Management Blog
What does renting out your family home involve?
Homeowners who have decided to rent out the family home often struggle with the facts about renting out their property.
As a property management company with close to 20 years of rental management experience in the single-family home market, we see many of these property owners suffer because of misperceptions and expectations about the rental process.
Often homeowners have deep attachments to their home. Your home might symbolize personal memories of childhood or meaningful time spent raising a family. The emotional attachment of a former residence has to be dealt with when a homeowner decides to become a landlord.
Listed below are some questions to contemplate before leasing your home.
Why Are You Leasing Your Home?
Many property owners who find themselves in dire financial straits believe they can get someone else to make their mortgage payment by leasing out their home, but that may not always be the case.
The amount of rent you receive for your home depends upon supply and demand in the marketplace. That means if your mortgage payment is $1500 a month, you may only be able to charge $1200 for your home if that's all the market will bear.
You can't force someone to rent your home at the price you demand, and you will have to pay the remaining balance to cover your mortgage. However, in regions of the US where the market is on an upswing, you could cover the mortgage and even make more money.
Are You Okay Having Strangers Live in Your Home?
You need to understand a few things before answering this question:
- First, not everyone you lease to will respect your home as much as you do.
- Second, wear and tear is inevitable, and you'll need to foot the bill for some of that wear and tear.
- Third, you will need to follow your state and local laws about tenancy and the ground rules your property management company has in place regarding your access to the home.
Technically, once the lease is signed, the tenant takes possession of your home and you cannot drop by to visit with them, do your own household repairs or walk through the home unless it follows the process outlined in their lease. Peeking over the fence to see what's going on is not a good idea.
Will You Want to Move Back Into Your Property at Some Point in Time?
Once you allow others to live in your home, it's likely to require some renovation or repair before it's ready for you to move back in. You may also find that your long time neighbors aren't very happy with you for allowing renters in the neighborhood.
Do You Have a Budget for Home Improvements and Repairs?
You must be willing to update/repair all cooling and heating systems and appliances. Once the home is turned, you might be required to paint and replace the carpet. These costs are necessities that will keep your home looking fresh and attract good tenants. Keeping the outside of the home in good condition may also be an added expense.
NOTE: Many single-family property management companies have a pre-arranged escrow account that you must keep funded to pay for small repairs. If your management company doesn't do this, then start one for yourself so you don't have to short change your personal budget to make rental home repairs. You should allocate between 5-7% of your rental income toward planned maintenance.
Thanks to Horton Group for use of the intro photo.
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- Melissa LaRose