In the last 2-3 years, the Real Estate world has been focused on foreclosures that have flooded the market, and rightfully so. These foreclosures have impacted our local market significantly, causing home values in many neighborhoods in Maryland, DC and Virginia to drop significantly.
Even though prices have finally begun to stabilize a bit in some local markets, the significant drop in home values has affected all homeowners in our region – especially those who are looking to make a move but are burdened with a home that has seen a significant drop in value. However, this situation is not untenable. Many homeowners who are in this situation need not feel trapped by this market – looking to turn your home into a rental property could be the solution you have been searching for.
In order to facilitate a successful transition from homeowner to landlord, it is critical you begin to view your home as an investment – and this means detaching yourself emotionally from your home. For starters, you will need to:
- Calculate the monthly hard carrying cost of your home. This means factoring what your mortgage, taxes and mortgage insurance (PMI) cost you on a monthly basis.
- Factor in “x” amount of dollars for routine maintenance and repairs. Regardless of what kind of home you own, you will need to set aside some money every month to cover maintenance costs. Perhaps the HVAC filter needs to be replaced, or the system needs to be serviced. Maybe you need to replace some siding or fix a leaky faucet. It is prudent to set aside some amount of money on a monthly basis to cover these costs as at some point, you will need to maintain or repair something in the property.
- Understand how much rent your home will garner. Ultimately, a home will rent for what he market can bear – and each local market is different.
- Be realistic – your home may not become an investment cash cow, but if renting it out allows you to come close to break even (or a bit better), it may allow you to make the move you have been wanting to.
- Enlist the services of professional Property Management. It is easy to underestimate how arduous the task of maintaining a rental property can be. Additionally, tenant-landlord relationships are governed by a litany of state and local laws with stiff penalties for non-compliance. And do you really want a phone call at 2 am from your tenant about a leaky faucet or a creaky screen door? Property Management companies protect your investment and take care of the tenants and issues. And yes, in a shameless plug, Avery-Hess does offer professional Property Management Services – if you would like some more information about professional Property Management, please contact the Director of our department, Katja Hom, at: email@example.com.
Deciding to turn your home into a rental property is a decision that should be made on a case-by-case basis; for some of us it will make sense, for some of us it will not. If this option is financially feasible for you, what it will allow is for you to maintain an asset in Real Estate while rebuilding some equity over time, and will loosen the constraints for you on looking for a new home.
To learn a little more about property management services and if this option makes sense for you, feel free to contact Katja Hom at firstname.lastname@example.org.