While it may never have been your intention to become a landlord and rent out your home, there are certain situations where the need may arise, especially if the goal is to hold on to the property and not sell it, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
He notes that these situations could include relocating for work or dealing with some financial issues that may have come to light. “Whatever the reason, renting out your home has both its advantages and disadvantages, but depending on the circumstances it could work to your overall benefit,” says Goslett.
Advantages of renting out your home:
A double house payment will be eliminated
The money received as rental income can be used to pay the bond repayment and other expenses related to the home. This is provided of course that the rental income is enough to cover these costs, but even if it doesn’t, the rental income will provide some financial relief to a homeowner who needs to pay for a bond and possibly a rental on another property as well.
Sometimes it’s better to have someone in the property
If no-one is staying in the property, the house could become a target for thieves, vandals or squatters. This is more likely if the owner has relocated to another city or province and is unable to keep an eye on the property on a regular basis. If the property is occupied by a tenant, the risk of anything like this happening is largely mitigated. The right tenant could also assist with maintaining the property.
The tenant could be the future buyer of the property
In the case where the owner wants to sell their property, there is always the possibility that the tenant may decide to purchase it. The tenant may have been renting while they were saving for a deposit or to cover other costs associated with a property transaction, and could be the ideal buyer. The rental deposit could also be used as part of the purchase deposit..
Disadvantages of renting your property:
While there are definitely advantages to renting out your home, it is not without its downside.
The equity may be required to purchase another home
In the case where a homeowner has relocated and needs the equity from their previous home in order to purchase another, then renting their home out will not be a feasible option.
A tenant could make it more difficult to sell
As the tenant will not benefit from the sale of the property, they might be rather uncooperative during the sales process. The tenants may also not pay attention to the maintenance of the home or make it difficult for buyer to view the property. If the home is unoccupied, it is far easier to make repairs, clean up and get the property ready for potential buyers to view.
The possibility of bad tenants
It can be a long and tedious process to evict delinquent tenants. There is always that chance that the tenant stops paying rent or causes substantial damage to the property. Losing money and incurring additional expenses completely eliminates any benefits from renting out the property in the first place. This risk can be mitigated to a degree by proper vetting and background checks of all possible tenants.
It’s difficult to manage the property from out-of-town
Living in another town and trying to manage a property elsewhere could prove to be rather difficult. In this case it could be advantageous to look into hiring a property management agent who has the expertise to vet tenants, collect rent and ensure the property is well looked after.
“Weighing up the pros and cons will help homeowners to establish whether renting out their property is the best option for them. In the current market, there may be far greater advantages to selling a property than renting it out,” Goslett concludes.
This article “The Pros And Cons of Renting Your Home” was issued by RE/MAX of Southern Africa – http://www.remax.co.za/