Renting Your Home – What every homeowner needs to know.

for-rent-sign

Image by joeltelling via Flickr

The housing market continues to be sluggish and home prices remain lower than sellers would like.  For some home owners renting is the solution to making the mortgage payments.

Before you jump into being a landlord and renting out your home, you might wish to consider a few ideas.  First, do you have a temperament that will allow you to work directly with tenants?  Are you a people person?  Will it be hard for you to see others living in your house?  If it still sounds like a good idea, you will next need to decide what it would need to bring in on a monthly basis.  Make sure you include the mortgage, taxes and insurance.  Hopefully you can rent it for more than your costs so that you can make a bit of money as well.

The next thing that must be considered is the rental cost.  You will want to price yourself into the market, not out of the market as having your home sit vacant is not bringing in any money.  Do your research and make sure you are pricing your home accurately.  Remember that although you might love your extra-large deck or fenced in yard that not everyone is willing to pay for extras.  Some tenants will only be looking at the number of bedrooms or number of baths.  With this in mind, price accordingly.

Don’t forget your Schedule E – Yup all income is taxable so please contact your accountant too so that you can better understand what expenses and deductions can be included and to learn how much you will have left over at tax time each year.

Maintenance will need to be considered too.  Things like painting and cleaning between tenants.  Home repairs and maintenance like new siding and roofing.  Perhaps you need to replace a screen or hire a plumber to fix something in the home.  A pool of money should be sitting here in the event that something should break.  This is a good time to tell you that not everyone will treat your home as well as you do.  Some tenants will be destructive costing you thousands of dollars.

If you’re still thinking, “Yeah I can do this”,   then the next step is finding the right tenant.  While this sounds as simple as placing an ad and a sign at the curb, there is much more to be considered.  First off you will want to find a tenant who can actually pay the rent each month and on time.  You will want to treat each consideration with great care.  What does their credit look like, are they employed and for how long?  Do they move around a lot?  Have they ever been evicted?  It is best to interview each tenant as if you were filling a job position.  Make sure you put all information in writing and if they have rented previously ask for former landlord information so that you can contact them as well.  Always collect personal and professional references and do a credit and background check!

So you’re finding that this is still a bit of work and there are still a few more considerations.  Landlord’s insurance is going to cost you a bit more than the standard homeowner’s policy.  A general guideline is about 25 percent more.  The good news is that this cost can reimburse legal fees and provide liability protection should a tenant become injured in the home.  Maintenance and repairs must also be handled quickly so things that you could put off as a home owner must be fixed as a landlord.  You will need to handle complaints and yes, even legal issues such as in the case of eviction which can be costly.

If you like the idea of renting but not taking those direct phone calls then you may want to hire a property management company who will handle these responsibilities on your behalf.  If this is the route for you look for about an a additional 15 percent of the monthly rent to go towards this payment each month.  I hope you have found this information helpful!

If I can help you to sell your home or manage your property, give me a call!  Kim Woehl – Keller Williams Premier Realty 651-214-1459.  I work in the north metro area of Minnesota. If you enjoyed this article please like my page!  Have a great day!

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Buying or Renting your next home? Forest Lake Real Estate Agent Can Help

A depiction by Gustave Doré.

Image via Wikipedia

Beware of the Big Bad Wolf!

What does your next home look like?  For some who have been ran through the foreclosure process it might look like a rental home.   Look to your real estate professional to help you find that perfect location.  For a small fee, you can be assured that I will be looking for that perfect location!  I recently worked with a client who tried to find a rental home on their own.   Here is a bit of their horror story and why you need to work with an agent who can seek out a safe and concrete contract.

This family had been foreclosed upon and had to move out of their home.  On their own, they ended up moving out of their desired area due to cost and time frame.  They signed a short lease and then began looking for a place more in their area of choice and within their price range, again on their own.  They felt blessed when they found a beautiful home.   It was huge, had a great back yard and only needed some minor repairs which the husband was willing and capable of doing.

They signed a lease and moved right in.  The began fixing it up.   They were there less than a week when a friendly realtor knocked on their door and shared that they could not be here.  That the home is bank owned and that the person they signed a lease with, had no right to sign a contract with them.  They now had to move out quickly and with no place to go.  Not only that, but they had lost a huge deposit and rent money.  Just the idea of packing everything for a third time was about enough to put them over the edge.

They began the process of collecting this rent back.  I honestly do not know if they were ever able to get their money back, but the odds were certainly against them.  Luckily, this family called me and I began a search for a 3 bedroom home that would allow pets, they had 3.  These are challenges in the rental market, but ones we can overcome with persistent looking and quick response when a new rental came  on the market.

We were able to secure a 3 bedroom/2 bath home in the city of their choice.  They are close to the amenities that they were hoping for and were able to keep their pets.  If you are in the market for a rental home, let a trained professional help you in your search.  The cost of this service is minimal and certainly reduces the stress of working alone in a confusing rental world.

Give me a call today to find your next home!  Remember I can help you in buying or selling your home as well.  Trust me to find your next home.