If you are ready to upgrade to a new home but aren’t sure if you want to sell your existing home or rent it out, you’re not alone. A recent study of current buyers that already own shows that almost 40% of them choose to rent out their current property rather than sell it. There may be several different reasons as to why a homeowner chooses to rent out rather than sell their home however low interest rates in the past few years combined with a strong rental market in most areas almost ensures that a homeowner can make a nice profit each month by charging more in rent than their monthly mortgage payment.
Although this may seem like a great idea and the thought of making a little extra money is enticing, if you’ve never been a landlord or utilized real estate as an investment you need to ask yourself a few questions as well as take some things into consideration to make sure that you’re ready for what lies ahead. Before you make your final decision it’s a good idea to check with your homeowner’s insurance to see if your premium will increase since you will no longer be the primary occupant of the home. This could affect how much money you make each month and cut into your profit. You’ll also need to think of what you want to include in your lease agreement. Will you require a one year lease? Are pets allowed? Smoking? Can your tenants paint the walls or make updates to the home? There are a number of different things to include in your lease agreement that many landlords often don’t think of. Also, if you do choose to rent what will you do if an issue arises, such as your tenant being unable to pay, damage to the home or needed repairs or violation of the terms of your lease agreement? These are all things to take into consideration to ensure that you don’t get in over your head and having the right kind of people, such as an attorney or a repairman, can help resolve these issues quickly.
Before you dive into the world of real estate investment be sure that you know what you’re doing and realize that it doesn’t generally come without its challenges. If you have your bases covered and are prepared from the get-go renting out your home instead of selling it can prove to be a lucrative investment.