Consider These 5 Things First
A spare property is a hot commodity. If you’re trying to figure out the best way to get some extra cash from that property, turning it into a rental was likely the first idea that popped into your head.
The idea of having a fair amount of extra monthly income seems enticing, but it’s worth noting that nothing comes for free. Before you put that “For Rent” sign in your yard, consider some important things to be sure you’re making the right decision.
- Who Will Manage the Rental?
You can manage the rental yourself, or allow a property manager to handle that for you. Both options come with advantages and disadvantages. Landlording can be hard work – you’re the one your tenants will call whenever something breaks. You’ll have to collect the rent from them every month and periodically inspect the property.
You can pass all of these responsibilities onto a property manager and stay mostly hands-off, but you’ll have to pay the property manager a pretty penny. In the end, you won’t be making as much as you’d anticipated. Consider how much effort you’re willing to put in versus how much money you’re looking to make.
- What Will It Take to Get the Property Ready?
If the property needs repairs, you’ll need to get everything in working order before you rent it out. People won’t be keen to rent properties that need repairs, and if they are, you’ll wind up having to work on the property while the tenants are living in it. This can create a chaotic situation that will lead to unhappy tenants.
Cosmetic factors are important, too. You might want to modernize and update the property, giving you room to bump up the monthly rent a little bit higher. It helps to have a landscaping company fix up the yard, and to call a company like 1300 Rubbish to haul away any junk that’s sitting around.
- How Much Can You Charge for The Rental?
A gorgeous house in a shady neighborhood is only worth what every other house is worth. The rent you charge needs to be reasonable for the property itself, what’s included, and the state of the surrounding area. A mansion in a run-down neighborhood isn’t worth much, and a run-down house in a great area can’t command a high monthly rent. Use local averages, or get an appraiser to calculate a fair price.
- How High is Competition?
Look up the area on Gumtree to see how many other people are offering rentals. If a lot of people have houses up, you’re going to need to compete to win over potential tenants. This sometimes means pricing slightly lower than others or offering more for the same amount. Modernizing the property or adding things like smart home features might make you stand out above the rest. If you’re limited in what you can do and there are dozens upon dozens of other rentals nearby, you might have to wait a while to find a tenant.
- Would Selling it Be Better?
Some people will find that selling the property is a better option than renting it out. It’s far less responsibility and far more cash up front. If you’re saving up for something big, looking to build a retirement account, or wanting to move to the other side of the country, the profits from selling your property can help you achieve your dreams. You can always sell the property as-is and use the profits to form your nest egg or accomplish your goals.
The more research you do about renting a property, the better off you’ll be. Even if you decide renting it out isn’t the best option for you, you’ll know before you’ve started a contract commitment that you can’t get out of. Take your time to be sure you’ve made the right decision.
About the author:
Sophia Beirne is a blogger, specializing in careers, self-improvement, and side hustle topics. Wherever she is, she always enjoys participating in online discussions and sharing her tips and ideas with others.