Say you put your house up for sale, do everything you can to make it desirable to buyers, and it sits idle despite dropping the price. Sometimes, no inexplicable reason exists to explain it, but you’ve already scheduled a moving day with the moving company to your new home and cannot postpone it any longer. Is it feasible to transform your former residence into a rental property and simultaneously maintain two households? Find out whether renting out and owning two properties is for you.
Review Your Financial Portfolio
Before you saddle yourself with rental property ownership on top of your home, review your finances and budget. Could you even afford to take on a second mortgage even if it’s only a temporary acquisition? Remember that you must guarantee that you find a trustworthy tenant who pays rent on time and in full and plans to reside in your old place for an extended period of time. Otherwise, the money you were counting in is nonexistent until you fill the vacancy.
Double the Bills
You know how you always happily anticipate receiving your mortgage and utility bills?! Imagine receiving two sets of bills that you must pay – not fun. Maybe moving isn’t the best option at this time, and you should postpone moving services, especially if you’re underwater with your first home. When calculating how much rent you need in order to cover your second home’s expenses including mortgage, insurance and utilities, research the going rate in your area, recommends Zillow, and adjust the rent within that range. Falling behind on either mortgage payment, says US News, could cause you more financial stress and create significant credit problems.
Are You Landlord Material?
Take a hard look at yourself and ask this question, “Could you become a landlord?” Factors that indicate you’re not the best candidate, says Zillow, include laziness, unskilled at fixing things, too busy, lacking savings, easily stressed out and not being a people person. Understand that becoming a landlord is another full-time job, so if you’re not prepared to handle everything that comes with a rental property, hire a property manager to oversee the home.
If you decide to convert your former home into a rental property, you may also need to convert your mortgage terms with your lender and update and add to your homeowner’s insurance policy, says Money Girl. One benefit to owning a rental property is that you can deduct expenses from your taxes which helps your bottom line, states US News, especially when you’re directly involved with the upkeep.
Be aware that when you are the landlord, you are responsible for your property and may be at the tenant’s mercy when they need something fixed or replaced. Extra time and effort must be devoted to the rental, and you must ensure you have the money and a plan for handling emergencies. Updating and servicing your appliances before you welcome renters is important to keeping them happy. If you own more furniture than you need to furnish your new place, you could leave it at the rental for your tenant’s use or put it into storage through FlatRate Moving.