Pros and Cons of Turning Your Home into a Rental
As homeowners, you have the opportunity to rent out your property, which has the potential of helping to cover most, if not all, of your mortgage. In the best situations, there’s room to profit and then some! Taking the steps to turn your home into a rental property takes more than just placing a ‘For Rent’ sign in the yard, as there are several things to consider when it comes to undergoing such a task. Through weighing the pros and cons, you will be prepared to make the decision that is right for you and your situation.
Benefits of Turning Your Home into a Rental
Whether you have lived in the home for a decade or, in some cases, several decades, making the decision to turn your current home into a rental property can be beneficial to your freedom and financial health. Turning your primary home into an investment property might be a good choice if the housing market is less than desirable if you were to sell your house. As such, opting to go the rental route can help to tide you over until the housing market is stronger, which leads to an increase in your home’s value.
When your property switches from being your primary residence to being an income property, people will often benefit from lowered interest rates, which means more money in your wallet. There are even some tax deductions that you may be able to take advantage of, helping to offset the taxable income you receive as rent from your tenant. Additionally, if you have lived in your home for a while, you are likely to be more familiar with the condition of the home and can prepare for upcoming maintenance and cut down on potential surprises down the road.
You can even start on some of the projects while you are still living there. A little planning ahead can ensure that your potential income property is in shape to compete with area rental rates. These steps can also help to increase the value of your property, allowing for the potential for charging more rent than you would have been able to if the maintenance and repairs were not addressed.
Challenges of Turning Your Home into a Rental
Although there are several benefits associated with turning your home into a rental property, there are some important disadvantages that need to be addressed before you make your decision on becoming a landlord. Many of the risks that accompany renting out your property are associated with the tenants themselves. It is an exercise in trust when it comes to finding tenants for your property. Finding a tenant, finding tenants who pay on time, and finding tenants who will care for your property can be challenging, not to mention the headaches that can go along with the responsibilities of being a landlord, even when a legal agreement is made between parties.
The level of involvement associated with being a landlord can be overwhelming, as the management of a rental property may require significant time. Repairs, maintenance, and administrative responsibilities can be difficult to oversee if your rental property is a considerable distance from where your primary residence is located. You will also need to become familiar with the state and local laws when it comes to filling the role as a landlord, which may change over time.
Conclusion
Taking the step from homeowner to landlord is one that can be advantageous. However, it can also be a stressful experience, as the new responsibilities can be challenging to keep up with from afar. If you are thinking about making that step, hiring a property management company can help to address some of the challenges that accompany the process of turning your home into a rental property.
References
Go Compare. (n.d.). Pros and Cons of Being a Landlord. Retrieved from https://www.gocompare.com/landlord-insurance/pros-and-cons-of-letting/
Montana Money Adventures. (2017, August 10). 7 Advantages of Turning Your Primary Home into a Rental Property. Retrieved from https://www.montanamoneyadventures.com/advantages-of-turning-your-primary-home-into-a-rental/
Quicken Loans. (2016, August 10). Converting Your Home into a Rental: An Inside Look at the Benefits and Challenges. Retrieved from https://www.quickenloans.com/blog/converting-home-rental-inside-look-benefits-challenges
The Simple Dollar. (2017, December 13). The Advantages and Disadvantages of Owning a Rental Property. Retrieved from https://www.thesimpledollar.com/the-advantages-and-disadvantages-of-owning-a-rental-property/
