Owning A Rental Property: The Best And Worst Aspects
Owning a rental property comes with a lot of responsibilities and considerations, but many Americans are finding that it’s a great way to invest in something that will pay off well. If you already own a property and want to convert it or are interested in buying a new home in order to rent it out, there are many ways you can go about it; however, there are some things to think about first. Location is crucial, as is knowing how to market the home to attract renters. You’ll need to figure out whether you’re going to rent out the home year-round or if your budget will allow for seasonal bookings, since the cost of maintaining a big house can be high, especially in certain areas of the country.
There are many pros and cons when it comes to setting up a rental home, so it’s important to simply weigh them to see whether becoming a property owner will benefit you. The costs can be high, but if your home has a lot to offer to potential renters, you may be able to make back your initial investment and then some. Having a steady stream of income throughout the year will be beneficial in many ways, from allowing you to save for retirement to giving you a nice chunk of money to put into a college account for your children or grandchildren.
Here are a few of the most common pros and cons to consider when you’re thinking of buying and setting up a rental property.
Hiring a property manager
One of the first things you should consider when owning a rental property is who will manage your bookings and run the day-to-day business, as well as the pros and cons of each of your options. Taking on both responsibilities yourself can save you money in operating costs. However, if you are inexperienced or don’t have the time to commit to the work, hiring a property manager is your best bet, and will likely earn you more profits in the long run.
There are many pros to working with a professional property manager, but it’s important you pick the right one. Look for a team or an individual that offers round-the-clock support and will handle all customer requests and issues. They should also have excellent online reviews and clear pricing so you’ll know exactly how much you’ll be spending for their service each month. Turning over the daily grind to an experienced property manager is a great way to not only keep your renters happy (and profits rolling in), but also reduce your stress.
Maintenance
Maintaining a rental property can be expensive, especially when it comes to repairs throughout the seasons. In order to cut some of those costs, you might consider closing up the house for part of the year and only renting seasonally. While this will affect your rental income, it will also help prevent the house from falling into disrepair, especially if your year-round home is far away and you’re unable to get there often. In areas where storms and other bad weather is prevalent, you’re more likely to face exterior issues that could really add up over the years. An added pro to renting seasonally is that you can use the home yourself for two weeks per year and still benefit from the tax write-off.
Making updates
Making updates to your rental property may sound expensive, but in actuality, there are several things you can do to make improvements on both the interior and exterior that won’t cost much but will add to the appearance and comfort for your guests. Painting, sprucing up the front yard, and cleaning the vinyl siding are all great ways to get your property into shape while adding to its value.
Figure out the details
Figuring out the details of how you want to run your property before making any big investments is crucial. You may not want pets in the home, for instance, or you might allow pets only if they are small and the owners pay a cleaning deposit. You’ll need to think about setting up insurance for the property, as well as learning about your legal responsibilities as a property owner in the city you choose to set up in. This can be a lot of work, so give yourself plenty of time to take care of it.
Owning a rental property can help you earn supplemental income, diversify your investments, and make new connections with people you might never ordinarily meet. However, it’s quite a bit of work and requires a lot of thought and preparation. Think over the pros and cons carefully before making any decisions. With a good plan, you can figure out the best ways to set up a rental property that fits your needs.
