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So, number one, the rental return does not justify all of the troubles you’ll endure.
So, owning rental properties is a great way to, you know, build equity in a home and have residents pay off that equity and provide cash flow each month. However, it’s not completely passive.
There are, you know, repairs. There are vacancies that can cause you, you know, just emotional stress of knowing that the house is not filled.
You’re not getting the rental income, but you still have a mortgage to pay off. And then turn costs.
Every time a resident moves out, there’s likely going to be painting required, some small maintenance repairs required.
And all of this causes brain damage and causes you to think about, you know, what’s going on with this rental property.
So, if you’re not able to handle those things, probably best not to rent out your house.
Number two, you have an emotional attachment that cannot be broken to the house.
We’ve had a number of rentals who come over and it was the first house that they got married in, or the house that they had kids in, or the first time that they purchased.
And they have a different level of expectation of how the house wants to be treated than potentially a resident who moves in would.
So, if you think that you, you know, have this emotional attachment that you can’t fathom somebody else who you do not know to live in the house, it might not be best renting out your home.
Number three, you need to move back into the home in less than a year.
So, we have owners reach out to us, owners of houses and say, “Hey, I need to move back into this house in six months.
Can you guys find a three-month renter?” A lot of times, not worth the headache to find somebody for three months.
It would be great to have three months of rent paid to you. A lot of times, it’s difficult to find a resident for a two, three-month lease.
Most residents are looking for about a 12-month and especially from just moving residents in and moving out, it’s a lot of expense for the resident to do that, as well as the owner if there was any kind of repairs or any leasing fees that you would need to pay. It’s best to look for a longer-term 12-month lease.
That way, if you’ve got a hard back door that you need to be getting to your house, you know it’s open.
So, number four, you can’t afford to pay your mortgage, the house is in need of repairs. And, this is a big one.
Houses do need repairs, especially the older the house, the more the repairs are going to be.
And so, it’s a good rule of thumb to have about six months of reserves in your bank account specifically for this rental house, because if there’s any vacancy and you need to still pay the mortgage, you need to be able to have funds to weather that storm, as well as repairs.
So, just over the course of the year, there’s going to be repaired to the house.
It could be large expenses like an HVAC or a roof, or it could be small things, you know, the exhaust vent of the bathroom goes out and you need to send somebody to fix that.
If any kind of repair is going to throw you completely off and puts you in a very stressful financial situation, it might not be the best to rent out your house.
And the fifth one is if you have a friend or a family member who’s going to lease it out, you probably don’t need to look elsewhere on Zillow or marketing online to find a resident.
If you’ve got somebody that you trust, a family member, a friend, that can be a great way at lease out your house.
Probably, best to go down that route rather than searching for somebody else.
Again, this is Gray Hall, with gkhouses talking about 5 reasons not to rent out your Fort Collins home.
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