Investing is always a risky opportunity, but there are different types of investments to choose from. Investing in real estate is always a great option; whether you invest in a home or a condo, you can become a landlord and rent the space to tenants who need it. The rent would essentially pay off your mortgage, while you build equity in the home.
Choosing to rent your home or condo as opposed to selling is wise if you’re looking to relocate and don’t want to sell your property. Renting to tenants will cover the cost, and help you reach your financial goals even faster.
What should you consider before renting your home?
The first thing to ask yourself is if you’re ready to become a landlord. No matter how responsible the tenants might seem in the beginning, they can easily end up being the opposite and damage your home, while lowering the value of it at the same time. You will need to have a flexible schedule because there are times when the tenants will call you to deal with toilet clogs or pipe bursts. These are serious issues that will need to be handled in good time.
How much should you charge rent?
There are a number of factors you need to consider when coming up with what price to charge. First, determine what your home’s value is in the current real estate market. The current value could be very different from what you paid for your home.
Have an appraiser visit your home; they will be able to provide a more accurate assessment of your home’s value based on local sale prices, the condition of your home, and its location.
The rent you are going to charge for your home should be a percentage of the market value. A common percentage many tenants charge is 0.8% to 1.1% of the home’s value. If the home is valued at $250,000, you can charge between $2,000 and $2,750 monthly.
If the value of your home is below $100,000, charge close to 1% of the home value. If your home is a little more expensive, consider charging a lower percentage; otherwise you might not be able to attract the tenants you’re looking for.
You need to put into consideration how much other landlords in the area are charging for their rental properties. If you find that your rent is way more than what the other landlords are charging, then there is a chance you will have a hard time finding a tenant who will be ready to accept the terms, and able to afford the property in the first place.
If you are looking to rent out your home so you don’t have to pay for the home loan, then the rent should be the same price as your mortgage payments. You also need to remember to factor in estimated costs for repairs, homeowners’ association fees, taxes and insurance.
One thing you need to keep in mind is you cannot choose whatever rate you want. There are some states in the U.S. that have placed limits on how much landlords can charge for rent, late fees and deposits. The same applies to the different provinces in Canada.
How do you put up your property for rent?
Are you ready to find a tenant for your property? Circl is a rental property directory that lets landlords post rental listings. Manage properties on desktop, or download CirclApp to upload and manage properties wherever you are. The app lets you screen tenants, schedule a viewing with them, and even upload work orders to contractors if a home repair needs to be completed.
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