Just like any other business venture, renting out your property has its risks and rewards. It just so happens that both of those tend to be steep! You can get away making a hefty profit, or you might burn through money without a dependable tenant. Here are some things to watch out for!
What to Watch Out for Before Renting Out Your Property: Liability Issues
This one is a must. Learning about the common risks and how to prevent them will be fundamental in preparing a property for renting. Beyond the basic home insurance that you will need to pay for the property like any other, you may want to consider insuring your property against damage done by the tenant. A security deposit can only get you so far. You may also want to think about forming an LLC (limited liability company) in case a tenant wants to sue you for damage done to them within your property. Regardless, do some research on where and how you would be liable as a landlord, and take the proper precautions to avoid such hazards.
In the case of tenants, prevention is the best cure. Getting a bad tenant is not the end of the world, but you definitely want to avoid that possibility as much as possible. Tenants who cause damage to the property or to themselves can become a huge money drain before long – and if they are slow on the rent, that certainly doesn’t help either. So, jump through the necessary hoops to ensure that your tenants are basically responsible and just plain old good people. Screening applicants can help fill your properties with quality tenants. Ask for references from past landlords or professional associates, and make sure they’re financially stable and independent.
What to Watch Out for Before Renting Out Your Property: Market Issues
The real estate market is flexible and inconsistent – meaning that you need to be aware of your local goings-on. Doing the research and reading the articles relevant to your real estate could make the difference between surviving and floundering in an economic crisis. You will also be better-connected to your town’s tenant market, thus being prepared for when your current tenants inevitably move on. Having tenants consistently is the number one way to stay afloat even while paying off your property.
House hacking or purchasing property outside of your house can be intimidating – after all, your most valuable assets are on the line. But the payoff is worth it! As long as you are well-informed of the risks and connected into the industry, you can come out on top.
Check out this article on home repair issues you don’t want to put off!
Steelbridge Realty LLC is a Licensed Real Estate Brokerage that utilizes cutting-edge marketing techniques and data-driven Real Estate solutions in today’s ever-changing environment. Our group of professionals have decades of experience and have navigated through many business cycles. Our diverse background gives us the tools to guide people towards successful decisions.