Renting out your property comes with advantages as well as disadvantages, and you’ll need to consider both the risks and the benefits when you’re deciding what to do with the home. Your decision will ultimately depend on your financial goals. This is the strategy to follow when considering how to rent out your house.
The Risks and Benefits of Renting
The biggest risk in renting out a property is that you’ll have a bad tenant. If you get someone who doesn’t pay rent or damages the property, you could have high repair costs and you will ultimately need to evict that tenant. Bad tenants cause major problems, and if they break the law or use your property for something they shouldn’t, you could face a lot of your own liability.
Vacancy is also a risk of renting out your house. If you don’t find a good tenant quickly, the house will be empty and not earning you any rental income. If you work with a great property manager, you won’t have to worry so much about long vacancies or bad tenants. When you offer a well-maintained home at a fair price, you shouldn’t have too much of a problem filling it quickly with a great tenant.
Legal risks come with renting out properties, and there are many federal, state, and local laws to be aware of. If you break a law or fall out of compliance, it will be costly. Get to know the laws, or work with a property manager who can keep you out of trouble.
The advantages of having a rental property include income and long term returns. You’ll have rent coming in every month and your value will increase while you build equity. Real estate investments traditionally outperform the stock market in the long term. You can also take advantage of tax deductions and benefits when you rent out your home.
The Risks and Benefits of Selling
With selling your home, the pros and cons are far simpler. It really breaks down to whether you want cash now and the ability to walk away from your property, or if you want to earn the money later and continue holding onto the asset. Selling depends on what you value most and what you’re hoping to get out of your property.