Avoiding Pitfalls When Renting Your Home
Many homeowners who have been struggling to sell their property in the current economic market have looked at the possibility of becoming a private landlord and letting their house. It allows you to cover any outstanding mortgage payments you have while holding on to your home until values begin to rise again. However, it’s not simply a case of finding a tenant; there are other costs and responsibilities that can easily catch you out if you’re not prepared.
The first thing to do is to analyze the market. It’s no good renting out your house to cover your mortgage costs if rental values in your area are not high enough, so have a look at what is out there before you take the plunge.
There are also some up-front costs to consider before you can start letting a property, including fees for legal requirements, such as having a municipality inspector come and inspect the property to ensure it means the required code. Solicitors will also need to be paid in order to draft up a suitable rental agreement, although property management firms can also include provide this services. Such companies can be valuable if you plan to move away from the area, but you need to take into account that they will take a percentage of the rental amount received. Different states also have different rules regarding tax, so you may find you have to pay more in this respect if you let your home.
Insurance costs may also go up. Specialist policies, such as those provided by Simple Landlords Insurance, often cost more in terms of premiums, but you can save a significant amount of money in the long run by protecting against damage caused by tenants that may not be covered in a standard insurance policy. In addition, you can tailor such a policy to contain cover for legal expenses related to any action you may have to take against a client.
You may also have to make a few small home improvements, such as fixing any minor damage or replacing stained carpets in order to attract the right sort of tenants. The rental market is very competitive, so you’ll want to make sure your home stands out from the crowd.
All these extra costs require carefully consideration and budgeting, but they are by no means prohibitive. With adequate planning, you can make sure you can get that move while potentially improving your financial situation.