Maybe you’ve been able to take advantage of low home prices and interest rates during the past few years. If you are a new(ish) homeowner or if you have owned your home for years, you may have considered from time to time moving out and turning your present home into a rental. My wife and I are considering the same at the moment. We will outgrow our tiny home in a year or two. In the meantime, we’re spending a lot of time and money making it an amazing place to live (it was a real fixer upper). We look forward to the steady cash flow of a rental, but there are many considerations we’re thinking about for the first time. I’ll walk you through some of these, since you may be thinking about the same possibilities for yourself.
1) Figure out how much you could make in rent. A professional management company could do this for you, but you can reasonably do it yourself. This can be as simple as looking on Craigslist to find out what other properties on your block or neighborhood are renting for month by month. If you price yours too high, it may sit empty. Price it too low, and you’ll leave thousands on the table for the term of a lease.
Also factor in how much you’ll save out of each month’s rent to cover repairs and updates to the rental property. Experts recommend 25%. Also consider the time you’ll spend keeping things up. If this is your first rental property, your experience here can determine whether you’re likely to do this again in the future.
2) Remember, you’ll have to change your homeowners insurance. This will likely cost a good deal more than your present homeowners insurance. Budget accordingly.
3) Who will manage? Maybe you know the perfect tenants and you are confident you have the time and disposition to be a great landlord. Or you may need to hire a professional property management company. These guys normally take somewhere in the neighborhood of 10% of your monthly rent. This could be a small price to pay in order to never worry about finding tenants, covering repairs, or collecting rent.
4) Contact the powers that be. You must inform your municipality that you are renting out your property. You must also obtain permission from your mortgage company and possibly pay a small fee.
5) Update and Improve Your House. Make sure that you are up to code. This includes your wiring, fire detectors, and many other factors. Get the home inspected and have the inspector give you advice regarding these steps. Once your home is code compliant, make sure it’s freshly painted, modern looking, fitted with working appliances, attractive, all the things that potential renters will look for.
Turning your present home into a rental property and using the income to pay your mortgage is a great option for many homeowners. If you live in New Jersey, you can rent out a room in your house, or you can consider house trading, which can get you a nice vacation to a place you’ve always wanted to go to. A lot of people come here to play at the finest online casino New Jersey has to offer, so this makes the deal very attractive for them. For now, I’m learning a lot about this process, still a couple of years away. There are many considerations to keep in mind, but the end result could be very fruitful.