If you are considering investment rental property or want to convert your home into a rental, there are many things to consider. What sounds like an easy way to make money can turn out to be a disaster that ends with emotional and monetary loss. There are many things to consider when renting property, and here are a few ideas to get you started.

Rental Considerations

1. Whether or not to hire a property manager:

If you’ve never been a landlord, it can be a rude awakening. Even with background checks, it is amazing what damage “normal” people are capable of creating. Additionally, collecting rent, handling complaints, and handling evictions can be very stressful.

When a person only has one or two properties, a property manager may be a luxury, and one should only consider it if it works into a budget. Call a property manager, and get an estimate. If you are adding one more rental than you can reasonably handle, then it is essential to make this decision.

When deciding whether or not one wants to be landlord, one must consider the tough requirements. Are you willing to perform inspections? Are you willing to persist in payment collection? Most importantly, are you willing to evict a family who claims to be in financial distress? It may feel heartless, but a landlord who is not willing to run the rental like a business could end up in foreclosure and financial ruin.

2. Neighborhood:

If the neighborhood in which you are considering your rental is dirty and in disrepair, you will likely have a bad experience with tenants, or they won’t stay long.

Rental properties are often in low-income areas of town, so curb appeal matters both in how much you can charge and what type of people you will attract. Slumlords are a real thing, and you don’t have to abide by the stereotype. However, renting in low-income communities can be a challenge.

3. Surprise Expenses:

Lastly, rentals can be expensive, and you need to have a healthy reserve in order to handle surprise expenses. HVAC units and appliances can break. Plumbing can fail and cause water damage that may exceed the coverage of your insurance.

You must have a credit card or savings account with enough to cover your expenses, or your property will not be rentable. Like empty hotel rooms, empty rentals equal lost profits.

Renting is an excellent opportunity for many people, but those who go into it blindly may be disillusioned by the realities of investment rental properties.