What You Need to Know to Rent Your House
Whether you've tried selling your home and have failed, or you just have a second home that you're not using but do not wish to sell, renting out your home has probably crossed your mind. Renting your home can help you to recoup some of your investment while awaiting a sale or bring in extra cash, but only if you're prepared.
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Length of Rental Time
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Before you put out the "For Rent" sign, you need to know how long you plan to rent the house. If you're only renting until you find a buyer, your rental time period may be much shorter than if you have no plans to sell the house. It's customary to ask renters to sign a lease or a rental agreement, and the terms of this agreement will depend upon how long you plan to rent the home.
Insurance
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Just because you're renting the home doesn't mean you can drop insurance on the house or keep just structural insurance. "Turning your house into a rental property means additional insurance that covers lost rent and other issues, such as liability and fire," writes Bankrate.com's Megan Kamerick. These insurance costs will also figure into the amount of rent you will charge tenants.
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Maintenance
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An important part of having a rental property is having a maintenance plan. Unless you want to be responsible for all maintenance and repairs yourself, you'll need to decide for what the tenant will be responsible and who will handle the rest of the tasks. If you're not a plumber or handyman, you'll need to find one and work out an agreement. This is especially important if the home you plan to rent is some distance from your residence.
Rent
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One of the most difficult aspects of renting a home is knowing how much to charge for rent. While a mortgage, if there is one, taxes, and maintenance costs all have to be figured in, sometimes, it's not possible to recover all these costs through rental income. Tax breaks may help you to break even; a discussion with a tax professional can help you understand the tax issues related to renting the home. In the end, however, in order to be competitive, you'll need to charge a rent for your home that is similar to rents for similarly sized homes in the area.
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