Renting out your home can be a smart way to earn passive income on your investment property. Many investors are choosing to rent their property out and earn a monthly income instead of listing their home to sell. Renting out your home comes with its own specific risks and rewards, both of which you should be aware of before deciding to rent out your property.
Here are six things you need to consider before renting out your home.
1. Do You Have The Time?
Being a landlord can be a lot of responsibility. Actually, being a good landlord is a big responsibility. It involves solving problems quickly, effectively communicating with tenants, and running the legal and financial aspects of a rental property. While a rental can be a source of passive income, it doesn’t mean you just sit back and wait for the rent checks to roll in. As a landlord, you are responsible for:
- Understanding and following all building and state and local health codes
- Maintaining a unit that can withstand severe weather
- Making sure the property has essentials like heat and electric
- Quickly responding to tenant issues
- Ensuring a hazard and pest- free living space for renters
- As a precaution, understanding the local eviction process
- Even though you’re not living in the property, it’s still your property, and you have a responsibility as a landlord to take care of issues quickly and provide a safe and livable space for your tenants.
2. Do You Know Your Rights?
Being a landlord means knowing the laws that apply to both you and your tenants. From discrimination laws to security deposits and handling evictions, you need to be well-versed in what you can and can’t do as a landlord to prevent a big, costly misunderstanding. Before you put a “for rent” sign up, educate yourself on landlord-tenant laws and how to keep yourself safe.
Rental Rules For Vancouver
If you have property in the Vancouver area, it’s important to know the rules and regulations for short term rentals in your area. When it comes to renting out condos, different buildings have different rules. Some have regulations about how many units can be rented out at once, or strict rules about pets and wait lists.
Check with your strata before proceeding to get a clear understanding on what is allowed (and what is not) when it comes to renting out your property.
Need some guidance? We can help you understand and navigate the laws and guidelines so you can walk confidently into a profitable rental business.
3. Will You Allow Pets?
Offering your rental as pet-friendly will open up your pool of potential renters, but it will also mean there will be dogs and cats in your home. Vancouver is a very pet-friendly city, so chances are, your potential rentals with have a four-legged family member that’ll be moving in with them. And as cute as they are, dogs and cats can be the reason for mess, noise and maybe even damage to your home. Advertising your property as strictly “no pets” may keep your property nicer for longer, but it also drastically reduces your options for tenants. If you do decide to allow pets, draft a very clear pet policy laying out expectations and fees associated with pets on property.
4. How Much Will You Charge?
The beautiful thing about using your investment property as a rental opportunity is the consistent and passive income it generates. But before you get your first tenant, you’ll have to find a rental rate that is both reasonable for the renters, competitive in the market and profitable for you. When you’re deciding on how much to charge for your rental, consider these things:
- Research your home’s value on the current market
- Find a home appraiser to help give an accurate assessment of the home’s worth
- Explore what other landlords are charging in the area for similar properties
- Educate yourself on rental rate laws in your area
- Most landlords charge between 0.8% and 1.1% of the home’s value for rent. Homes that are worth less than $100,000 usually fall towards the 1% mark, where more expensive homes (over $350k) will attract more renters if they charge a slightly lower percentage.
5. What Are The Deal Breakers?
When you open your home up as a rental, you’ll attract a lot of different people with a lot of different lifestyles. Before you get your first tenant, you’ll have to decide what your stance is on guests doing certain things in your home such as smoking, large gatherings, redecorating or previous evictions or bankruptcies. Determining these things up front will help you screen qualified tenants.
6. Will You Hire A Property Manager?
Most people who rent out their homes have full-time jobs and families and can’t devote all of their time to handling tenant issues, completing repairs and maintenance, and handling the accounting side of managing a rental. Many decide to hire a property manager to serve as an extra set of eyes to keep an eye on the property. Some responsibilities of a property manager include:
- Collecting rent
- Finding and screening tenants
- Handling leases/move outs
- Property maintenance
- Managing budget and
- Maintaining records
Of course, they work at a price, but for some landlords, it’s worth paying someone else to handle these issues if they can’t be there all the time to do it themselves. Especially if you work with an experienced and professional property management team that you can sit back and enjoy the perks of owning a rental property without all of the hassle.
Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!
RE/MAX Michael Cowling & Associates