10 Questions to ask yourself before renting out your own home
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TABLE OF CONTENTS
1. SHOULD I RENT MY HOME IF I CAN’T SELL?
2. 10 QUESTIONS TO ASK YOURSELF BEFORE RENTING
3. THE BOTTOM LINE
SHOULD I RENT MY HOUSE IF I CAN’T SELL IT?
Recent market conditions have resulted in downward pressure on benchmark pricing across all property types in Calgary. Resultantly, a number of Calgarians are simply unwilling or unable to sell their home for a price they would consider too low to stomach. This presents an arduous decision, and many have opted to explore the opportunity of renting.
On the surface, renting your home can appear to be an attractive proposition, right? You advertise your home on rentfaster.ca, respectful professionals will cover your mortgage payment, and you’ll simply wait till the market bounces back before selling for a premium, what could possibly go wrong? Whilst this can be the reality it is seldom the norm, and as a landlord I can attest to the fact that typically nothing ever goes to plan when renting your own property. I am certainly not intent on discouraging you entirely, I simply want to encourage a high level of caution.
I am a huge believer that a well thought out rental portfolio can yield significant results, however if you have no desire on becoming an educated property investor you may quickly discover that you have bitten off more than you can chew.
Before making the decision to rent your home, ask yourself the following questions and make sure this is the right course of action for you and your family.
10 QUESTIONS YOU NEED TO ASK YOURSELF BEFORE TURNING YOUR OWN PROPERTY INTO A RENTAL
1. How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses). Our economy also plays a huge part in this.
2. Will the rental income actually cover your mortgage and all other outgoing expenses? Are you aware of the additional expenses you will face as a landlord?
3. How will you effectively screen tenants to ensure they are the right fit for your home? And have you interviewed experienced eviction attorneys in case a challenge does arise?
4. Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner-occupied home?
5. Will you allow pets? Cats? Dogs?
6. How will you actually collect the rent? By mail? In person?
7. Repairs are part of being a landlord. Who will take tenant calls when necessary repairs arise?
8. Do you have a list of trades-people readily available to handle these repairs?
9. How often will you do a physical inspection of the property?
10. Will you alert your current neighbours that you are renting the house?
THE BOTTOM LINE
Again, renting out residential real estate historically is a great investment. However, it is not without its challenges. Ensure your decision to rent is based around a long-term investment with a well thought out plan, not because you are hoping to get a few extra dollars by postponing a sale.
I would also recommend you connect with a reputable property management company. You’ll pay a PM around 10% of the gross monthly rental income but good property managers are worth their weight in gold. This will ensure that your home is rented legally, ethically and you will hardly ever have to lift a finger. I’ve seen landlords hire a PM for the first year of renting, learn how it’s done and then take over themselves after they feel comfortable, although after receiving good service from a property manager most landlord would never even consider renting without one.
If you require any more information on renting your home, please get in touch I’d love to discuss it further.
Thanks for reading.
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