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Things To Consider Before Becoming A Landlord

Things to Consider Before Becoming a Landlord

If you’re thinking of renting out your home and becoming a landlord, there are several things to consider. While renting a home out could bring in some extra income to potentially cover expenses like your mortgage payment and other associated costs with owning a home, you could also experience some hassles along the way. Here’s what to know before renting out your home.

How to Prepare Before Becoming a Landlord

If you’re thinking of renting out your house, you’ll want to research what the going rent is in the area where your home is located to get an idea of what you might be able to charge future tenants. Look at other properties for rent in your area, and determine the comparability to your home in terms of square footage, amenities, and any renovations. Use this research to determine if you could rent your home for more or less than those other listings.

You’ll also want to lay out a budget of expected income from the rent you’ll collect, plus any expenses you will still need to cover. You might choose to have your tenant handle all utilities in their name (which takes the obligation off of you, the homeowner, should any bills go unpaid).

Know The Pros of Renting Out Your House

Here are some of the benefits to becoming a landlord:

  • You’ll be bringing in money while still gaining equity in your home. If the value of your home continues to rise, you could also potentially make money when you sell the home.
  • You could be able to claim certain expenses on your taxes as a landlord — including homeowners’ insurance, home repairs, and services like pest control and lawn maintenance.
  • If you’re looking to get into real estate investing, starting with a home you already own can be a great place to start.

Think About The Logistics of Renting Out Your Home

  • Draw up a lease that outlines security deposits, stipulations, and terms
  • Create an application that potential renters will complete, and research ways to run credit reports and background checks on future tenants.
  • Ask for references and meet future tenants for an in-person interview

You can find some resources online with prewritten rental agreements that apply to your particular state, or may want to consider consulting an attorney to make sure you really understand the potential financial and legal repercussions of taking on a tenant. Definitely learn your state’s laws relating to landlords, so that if you do run into issues with future tenants, you know your rights.