Hey, everyone. Gray Hall here with evernest, talking to you today about the top five reasons not to rent out your Boulder home.
Number one, the rental returns do not justify all the troubles you will endure.
So, owning a rental property, allowing tenants to pay down the mortgage will provide you cash each month, a great way to build long-term wealth.
However, this does not mean it’s completely passive. There is, you know, a number of things that come with renting a home.
There is, you know, a vacancy. One, the financial cost, but two, kind of the emotional burden of you have a mortgage to pay and the house is vacant.
And so, you know, you could have an HVAC go out, a roof go out, dealing with insurance claims.
There’s also term costs, so when a tenant moves out, you know, you gotta repaint a house.
You potentially might have to redo the carpet, redo the flooring. So, all of those can create headaches.
They do cost money, which we’ll kinda get into in a little bit. But there is, kind of the brain damage of having a rental property.
So, if that’s not something that you can handle, it may not be the best idea to rent out your house.
Number two, if you have an emotional attachment to the house that cannot be broken.
A lot of owners potentially will move out of the house and it might have been, you know, the first house where they lived after they moved out on their own, potentially the first house where they had kids.
Owners in these situations might not like it if you have renters who you do not know in the house, or if they are not treating the home in the same way that you would.
So, if you have an emotional attachment that you cannot break, that you’re just not able to get over and that is causing you kind of heartache or a headache, it might not be best to rent out your house.
Number three, you might need to move back to the home within the next year.
So, we’ve had multiple owners reach out to us and they’ve said, “Hey, I wanna move back into the city in the next eight months.
Can you guys rent out my house on a short-term lease?” It is very possible to find a short-term lease.
However, the majority of the tenants are looking for a 12-month lease.
And you’ll see the best returns if you’re paying, you know, any kind of term costs or a leasing fee, if you lease out the home for 12 months.
Another potential that you don’t like to think about is the potential for, you know, a tenant not wanting to move out of the house and having to go down the eviction route if you had a hard deadline that you had to get back into the house.
So, if you’re gonna rent out your home for less than 12 months, or if you need to get back in the next 12 months, probably best to not rent out your house.
I’ve worked with a number of owners who have bought a turnkey house and they’ve got a mortgage, and they see all the potential returns that they have.
But the moment there is a smaller payer, this throws off their cash load each month, and they’ve not built up the cash reserves.
They have about six months of mortgage expenses and the bank account for the property.
That way, if there is any kind of vacancy or repairs, because repairs will come with the home, and so, make sure that you got kind of the cash reserves to be able to pay those, as well as vacancies.
In a perfect world, the tenant pays every single month, but I have not seen that to be the case.
We don’t live in a perfect world, and sometimes tenants don’t pay rent, but you still have the mortgage obligation.
So, ensure that you got enough cash funds, cash reserves to be able to kinda withstand any vacancy or any repairs.
So, potentially not putting it on Zillow and trying to find out… If you’ve got somebody you trust, somebody you know who’s going to lease out the house from you, no reason to kind of look elsewhere, it typically can be good to rent out the house to a family member or a close friend if you, yeah, know them and trust them to rent out.
So, this is Gray Hall with the top five reasons to not rent out your Boulder home.