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Financial Considerations

Before making the decision to rent out your home, we’ve summed up some things to help you prepare:Costs to Maintain a Rental Home

  • Monthly expenses – include mortgage payment, HOA dues, utilities, lawn care, etc.
  • Annual expenses – include property taxes, landlord’s insurance (typically 20% more than HOI), HVAC maintenance/service, vacancies, etc.
  • Repairs and replacement – may involve appliances, HVAC, flooring, walls, doors, windows, roof, etc.
  • Cleaning and maintenance – include “make ready” expenses such as cleaning, paint, flooring, appliances, HVAC, lawn care, etc.
  • Advertising, Tenant Screening – typically $50-150 per vacancy
  • Property management – typical management fees include 8-10% of monthly revenue and a leasing fee of 50%-100% of one month’s rent
  • Accounting – filing fees for year-end taxes
  • Vacancy – property management services can assist in reducing vacancies

Other Considerations

  • Tax implications – as with any business, profits are subject to income taxes (keep in mind that costs to rent your home are tax deductible)
  • Equity – rental income should cover your monthly expenses and ultimately increase your home equity over time
  • Expenses – be prepared for a “worst case scenario” (e.g. paying double mortgages, evictions may be expensive and take time to resolve, costs associated with vacancies and/or potential damage)
  • Tenant rights and renting restrictions – be aware of legal obligations, understand HOA restrictions, hire a property manager
  • Time and stress – a property manager will help

Renting your house, like many investment strategies, is a risk. If the value of your home appreciates over time, rents rise and you keep it rented, you can benefit from a fantastic return on your investment. On the other hand, if rents decline and your home value doesn’t appreciate as fast as you hoped, or if you have bad tenants, your investment may not show a profit. It’s important to do your research and tap into the knowledge and experience of others.

Let our team of Realtors® share their knowledge and expertise while you work through this decision!

Contact us today!

We can answer questions and help you along the way

FAQs

  • Perform a full background check, including criminal and credit history
  • Verify employment and income
  • Check rental history for previous evictions or late payments
  • Call personal, employer, and landlord references
  • A “no pets” policy does not apply to emotional support or service animals. If a tenant provides proof that their pet is an ESA, you must allow the pet and cannot charge a pet deposit.

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