Many property owners are making the choice to turn an abandoned home into a rental. While this can be a source of additional income, this may not always be a good decision. Becoming a landlord comes with a variety of responsibilities. From dealing with unruly tenants to complying with state and local laws, there are a few things worth considering before starting a home rental business.
How Much Will It Cost to Get a Return on Your Home Rental?
This is one of the first things that should be considered before becoming a landlord. If the home requires significant repairs, it may take months, even years to get a return on this type of investment. In addition to repairs, you should also consider rental prices in the area. For example, if the average rental price in your area is around $550 a month and you must rent the home for at least $700, you may find that you have no takers. This does not include taxes that must be paid on rental properties, insurance and other common expenses associated with home rental.
Can You Efficiently Deal with Landlord/Tenant Responsibilities?
There are multiple landlord responsibilities. As the owner of the property, you are responsible for the repair and maintenance of that particular building. While an unlived in home can become rundown if you do not sink the funds in to maintaining it, it will also cost money to maintain the home while renting. A repair that is needed that is through no fault of the renter rests on the shoulders of the landlord. Failing to fix these problems can result in legal repercussions.
Are You Willing to Assume the Risk for Property Damage?
Although there are many responsible renters out there, this does not guarantee that you are going to get one of them. Despite your best efforts of screening individuals and families, you may still end up with undesirable tenants. Common issues among landlords include damage to property and failure to pay rent. The landlord may or may not always be able to recover these types of losses. The deposit may not fully cover the damages and, although you will have legal options, this can be a long drawn out process.
Can You Meet Local and State Guidelines?
There are laws and regulations in place for landlords. These may pertain to the condition of the home, insurance and other pertinent criteria. The home must meet all codes for fire hazards and other applicable codes before renting. In the event the home rental is for HUD approval, there are other guidelines which may be imposed. While some of these may seem minor, they can add up to major money and fines.
Types of Rental Home Agreements
If you are unsure about how to go about a rental home agreement, you may want to put some thought into this decision and consider alternatives. If, for example, your initial goal was to sell the home, there are other options which may be available. This includes renting or leasing with the option to buy. Those that are not experienced in these types of agreements will face the burden of having an attorney go over the necessary paperwork.