Whether it is a property purchased as a rental investment, a principal residence or a second home, renting our your flat or house can have many advantages for any landlord. From additional income to savings leverage, as well as reduced taxation and partial property tax exemption in the event of prolonged vacancy, not to mention the upkeep of the property.
- Becoming a Landlord
- Benefits of Renting your property
- Disadvantages of renting your property
Becoming a Landlord
People tend to have mixed feelings of owning rental properties. On the one hand, being a landlord seems to be a good plan to make a lot of money relatively easily and securely, and on top of that you own property. On the other hand, people fear the risks involved, the time involved, getting bad tenantds, but also the fact that there may be most costs than expected amongst others.
Before renting, consider if you want to rent your home furnished or unfurnished, if you wish to go through an agency or renting it independently, and how much you want to rent it for.
In order to know if you wish to rent your home furnished or unfurnished, analyse the type of clientele that vistis the region in which your home is located in. If it is frequented by tourist who only stay for a short time or if it is frequented by a sedentary clientele. If your area is high in tourism, it is suggested to opt for a furnished rental as the rent is higher and the contract is lighter. If you want to know more about decorating and how to make your house feel like a home, click here.
A furnished house will cost more than an empty house. Similarly, a furnished house rented seasonally will generally be more expensive than a house rented by the month.
In order to set a price, it is important to understand the local market and the prices charged by the renters in the region your house is located in.
The better the equipment, such as a washing machine, an oven, a television, internet and so on, the higher the value of your property, and therefore, the owner may increase the price you can rent it for. It is also very important for you to set forth the age of the property, if it is new, if it is renovated, its location, its living space and emphasise on the low enery consumption if it is the case. Make sure to make your home outstand other homes.
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Benefits of renting your property
There are certain things to take into consideration when deciding on the future of your property.
The owner can make an attractive return on a rental property. The main advantages of renting your property includes: rent is a regular income, growth in the value of property income, the possibility ot increase the value of the property and being able to invest with a portion of the capital.
The biggest advantage of owning a rental property is that the tenants will provide you with a direct income. These rents can both finance a loan or can be used directly for savings. Not to mention, that income may increase over time. Landlords may gain more from an increase in the value of the property over time due to changes in demand in the area. Evidently, this increase is relative as it depends on the area in which the property islocated, if it is in an above average area, the return will become very significant, however, it may be less significant and more reasonably in some other areas. If your property is located in a dynamic suburd or in a large urban area, renting may be a wise choice.
Another factor to be considered is how the value of the property can always increase in terms of market pricing. Maintaining the property, the furniture, the walls, the paintings, basic landscaping in the yard and garden, will eventually add value to the property if the owner decides to rent in the future. Not to mention, these considerations will also increase the price for renting.
It is relatively easier to rent your home than to sell it, depending on the location of your home, it may be easier to find a tenant than to sell or buy a home. Not to mention that, by renting, the owner may still enjoy the equity of the property, by renting, the owner can still enjoy the growth of the local real estate market without risking much.
Concerning taxes, renting property is interesting as the cost of repairs, management, maintenance and utilities is passed on to the tenant. Renting a home is keeping a safety net, if you ever want to move back in, you are allowed to. Renting is a way to avoid financial distress, as it generates regular income, you may increase the price of the rent according to the local market and the possibility to move back in is always there.
Although property rental has many attractive advantages and benefits, it is important to point out its downsides.
Disadvantages of renting your property
There are some risks to take into consideration when deciding on whether or not to rent out your property.
The first risk, which is rather an obvious one is the risk created by the tenants. There is always the risk that tenants do not pay their rent, some tenants may also cause more damage than others, even though the security deposit is there to prevent financial loss, it is still a cost and a risk. Another risk related to tenants is that the owner does not have tenants at all, which means you will have periods of vacancy in the property where the property is not generating any rental income.
Regardless the property being rented or not, the landlord is still to pay property taxes, the cost of insurance on the property, and in some cases, the property manager.
Another disadvantage is that you may have to spend more money on this property than in other investments or plans. The owner will probably have to make various repairs over time, will have to look for new tenants and show the property, do administrative work such as registering the lease, inventory and so on.
It is important to think carefully about the irreversible act of selling property; selling it will represent a definitive loss of real estate assets and all of its benefits that can be drawn from it, in case of unforeseen financial need.
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