Now that you’ve thought about some of the advantages of renting out your home, it’s just as important to consider some of the following disadvantages as well:
Two monthly housing payments
Whether you buy your next home or you rent, you’ll have to worry about that monthly payment, plus the mortgage you’re paying on your other home. As long as your tenant is always timely with rent, this won’t be a problem. But if they fall behind and they’re late, you’ll have to worry about having enough money for your mortgage that month. This isn’t a concern if your home is paid off, but even so, you still have to worry about other expenses, such as property tax, homeowners insurance, etc.
Damage to your home
Whenever you let someone else live in your home, there is always the possibility that they can cause damage. Although this is what a security deposit is for, there is always the possibility that they might cause a level of damage that exceeds their security deposit. You can send them a bill for any remaining money that was spent in order to repair the damage, but there is no guarantee you’ll definitely see that money, and you may have to take the loss.
There are additional worries if you’re leaving furniture behind
Not only do you have to worry about any property damage, but if you’re renting your home furnished, you also risk damage (or even just wear and tear) to your belongings. If you do plan on keeping your furniture in your home, you’ll definitely want to charge a bit more in rent, and you’ll want to require a larger security deposit.
You may have to worry about evicting someone
Whether your tenant falls too far behind on rent, breaks community rules or is a nuisance overall, there is always the possibility that you might have to evict that person. Eviction can be a financially and emotionally draining process, and it’s not always the easiest thing to do, either. But if you plan on being a landlord, this is a possibility you’ll need to always prepare for. Although it can be impossible to predict whether someone will be a good tenant, you can take proper precautions by screening them beforehand. If they have poor credit or previous rental housing issues, such as prior evictions, you may want to move on to the next applicant.
Are you receiving long-term payments from an annuity or structured settlement, but would prefer to receive your money sooner? Peachtree Financial Solutions may be able to help. Contact Peachtree Financial Solutions today to learn how you can sell some or all of your future payments for a lump sum of cash.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.