If you have property that you either just acquired or have held in your possession for a while, you might be considering renting it out in order to make some more money on a monthly basis. However, owning a rental is often a lot more complicated than people initially think.
To help you decide if this is going to be the right option for you, here are three things to consider before renting out property that you own.
Make Finding A Good Tenant Your Priority
Before you decide to operate a rental and work as a landlord, you’ll want to ensure that you have a reputable way to find a good tenant for your property. Without a good tenant, your rental could quickly become much more of a headache than it’s worth to you in the rental income.
According to Military.com, you’ll want to get some specific information about every person that applies to live in your rental before you agree to rent your property to them. Things like a credit report, background check with a criminal history, and checking up with references can all give you a good idea of what type of person you’re considering renting to, if they will be able to consistently pay their rent on time, and if you should anticipate any problems arising with them as renters.
Get Financial And Legal Help From Professionals
To legally handle the business of renting out some property, you may want to consult with a professional to ensure that you’ve got all your bases covered. Because things like tax laws, zoning codes, and local rules and ordinances can be so complicated, Brigitte Yuille, a contributor to Investopedia.com, shares that you’ll make things so much easier on yourself if you have a professional lawyer handle this part of your rental.
Additionally, you may want to also work with an accountant for the financial side of owning a rental property, as tax laws and filing your taxes can also get sticky when you don’t know what you’re doing. While this will be an added expense, it could be very well worth it to you in the long run.
Don’t Over-Invest In Renovations
To get the best return on your investment, many people will conduct certain renovations or improvements to their property before they rent it out. But while this can be helpful for charging more money for rent each month, there’s a very fine line between making this a wise financial investment and overdoing it without a good return.
To help you walk this line correctly, Jimmy Moncrief, a contributor to Landlordology.com, shares that you shouldn’t make your rental nicer than the owner-occupied homes in the neighborhood, as this can prove to be a financial mistake for you.
If you have some property that you’re thinking about renting out, consider the information mentioned above when making your final decision.