OK…so now you know that it’s a buyer’s market and probably the best time in your lifetime to buy. You would like to rent your current residence and buy up, but you’re just not sure if you can make the numbers work. In fact, you don’t even know what the numbers are!
Determining your house rental value can be tricky. I suggest gathering information from several sources: (1) NEWSPAPER/INTERNET CLASSIFIEDS. – Research what other people are asking for similar homes in and around your neighborhood. Track those ads over a period of time and note which homes actually get rented (if the ad disappears, you can probably assume the home was rented). Don’t be afraid to call those owners and ask what their property rented for. Also, call the ones that are not getting rented and gather information about those homes. (2) NEIGHBORHOOD SIGNS – Drive around your area and when you see a “for rent” sign go ahead and call the owner and ask them about the house, it’s condition and price. They will assume you are shopping for a place to live. (3) ZILPY.COM – A website that provides rental comparisons online. Use Zilpy, but don’t just rely on their information alone. Combine their information with all of your other research. (4) PROPERTY MANAGERS – Contact a few companies in your city and ask if they will help you determine a rental amount. They will know the rental market and should be happy to talk to you. After all, they hope you might hire them to manage your rental. Go ahead and ask them about their service and fees.
There will be costs to renting your home. Be conservative and factor in that the property may not be rented two or three months out of the year. In addition, factor in the costs advertising, administration, and any expected and unexpected repairs, maintenance, mortgage, taxes and insurance. Talk to your insurance carrier about an umbrella policy for rental properties.
Owning a rental property can be very rewarding. The more prepared you are, the more likely you will have a positive experience. Make sure you have a team that consists of a real estate attorney, tax professional, financial planner and Realtor. Consult with all of them initially and often thereafter. Sign up for a local class on landlord laws. You will be entering into a contract with your renters, so the more you know about that relationship, the better. Check out books on owning investment properties and landlording at your library. Become an expert!
As always, I wish you the best and I’m happy to help.