Renting out your home can have many benefits. Some homeowners choose to rent their homes to gain some extra income or pay down bills. Others may choose to rent out their home temporarily while selling in a down market.
However, there are many potential complications that can arise with being a new landlord including costs, tenant disputes and legal issues. Doing your research before hopping into the rental market can prevent some big headaches along the way.
Know the Costs
Research rental rates in your area to know what you can ask for and whether listing your property is even worth the effort. Consult with a certified public appraiser to get an idea of how much your home is worth. Don’t underestimate the costs for repairs and maintenance on the property, including possible legal fees for enforcing a lease. Also be financially prepared for those times when the house is not rented.
Know the Tenants
It’s a good idea to vet and get acquainted with potential tenants. Be objective and pay attention to any personality traits that may clash with yours, but refrain from being too demanding. It is also a good rule of thumb to not rent to family and friends. Renting out your home is a business transaction and sometimes the two will not mix well. Instead, get to know a tenant by properly screening his or her credit report and running a criminal background check.
Know the Law
Consult with a certified public accountant and look up all the relevant tax codes related to investment properties. Research federal, state and local housing laws. Avoid handshake deals and amendments not in a lease agreement, because you won’t be able to enforce them. Also be prepared to make timely repairs on the property or you could face lawsuits from your tenants.