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I often talk about how buying a home is less expensive than renting one in most parts of Colorado. Rents are skyrocketing, and homes are still at great prices. These two situations are also causing some sellers to consider renting their home instead of selling it. After all, a homeowner can get great rental income and wait until house values increase before selling.
This logic makes sense in some cases. There is a strong belief that residential real estate is a significant investment. However, if you have yet to become an educated investor in this sector, you may be headed for more trouble than you were looking for.
Before renting your home, answer the following questions to ensure this action is right for you and your family.
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10 Questions to ask BEFORE renting your home:
- How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations? (This happens often during holidays and back-to-school when families with children have extra expenses).
- Because of the economy, many homeowners cannot make their mortgage payments. What percentage of tenants cannot afford to pay their rent?
- Have you interviewed experienced eviction attorneys in case a challenge does arise?
- Have you talked to your insurance company about a possible increase in premiums as liability is more significant in a non-owner-occupied home?
- Will you allow pets? Cats? Dogs? How big is a dog?
- How will you collect the rent? By mail? In person?
- Repairs are part of being a landlord. Who will take tenant calls when necessary repairs come up?
- Do you have a list of craftspeople readily available to handle these repairs?
- How often will you do a physical inspection of the property?
- Will you alert your current neighbors that you are renting the house?
Again, renting out residential real estate is historically a significant investment. However, it has its challenges. Make sure you have decided to rent the house because you want to be an investor, not because you hope to get a few extra dollars by postponing a sale.