I am a student who is living at home. l have been approved for a home loan. I have comtemplated accepting, buying and renting out the home. Aside from the risk of renting to tenants that may be problematic, what else should I consider?
2007-10-24 05:45:01 · 12 answers · asked by PV82 1 in Business & Finance ➔ Renting & Real Estate
#1- No one will care for your property like you will..........management companies may sound convenient but you are the best manager for your property.
You need to become aware of the tenant landlord rights and responsibilities for your state.
You can search for your state and they usually have a handbook.
I like the resources available at http://www.nolo.com
It's always wise to consider the what ifs and be prepared to act in your best interest quickly.
General Landlord info: http://www.rentalprop.com
I've also gotten great info on the landlord forums at
http://www.thecreativeinvestor.com
.....you can get advice from landlords in your state.
You also need to consider whether or not the mortgage, taxes and insurance you are putting on the property will be covered by the rent.....aka Cash Flow. (Preferably on a 30 yr fixed if this is a long term investment)
You also need to be aware that the rate you were offered was for Owner Occupied and you will sign a paper that says you will be occupying the home yourself. Otherwise you need to go with a NOO (Non Owner Occupied)Loan. Generally a bit higher rate.
If you break even monthly, In the future when you go to get qualified for another home....they will count the income you get from the rental but they will figure 2 mos of vacancy a year. That could make your income appear lower on paper then it actually is ........
If you have income but no expenses as you're living at home....it's wise to think about investing. RE is generally a very good investment for the long term, but in a time of market turmoil you may want to do some more research. If you plan on staying local then I'd say go for it within the next 12-18 mos ...... If you plan on seeing the world and moving away.......Long distance landlording can be an expensive proposition.
Good Luck
OBA™
2007-10-24 06:12:27 · answer #1 · answered by Anonymous · 0⤊ 0⤋
The people you rent to are probably the biggest cause for concern, but with proper screening, background and credit checks and references you can eliminate some of the worry.
You should also consider having money in reserve for any appliance, etc that may go out or need to be repaired as it is your responsibility to fix things like that. Plumbing problems can abound with renters as they sometimes flush things they shouldn't. Plumbers aren't cheap, either. You may want to consider just what kind of repairs you can make to the property on your own.
Make sure you know the housing laws in your area. Here in KY, there are strict limits on how many people can live in a house. There are also guidelines regarding evictions. Be sure you are very familiar with these laws before you decide to rent.
If I were you, I would not take section 8. It can be a difficult program to work with and the system seems to be constantly changing making it difficult to stay up to date on what is required of the system.
Depending on what type of home loan you get, you can get into all sorts of trouble if you are renting the property and the mortgage company is not made aware of this up front. Be sure to know the restrictions of your loan. I hope this helps!
2007-10-24 05:57:03 · answer #2 · answered by Loves the Ponies 6 · 0⤊ 0⤋
it all depends on the city by laws ,so get yourself a guide and studied from A to Z . You are looking for a big responsibility ,you need rules for your tenants since they are all young and a the age of fun! we have a students complex where we live and every time that they trow a party there is problem with the law. then you must make sure that you have the proper insurance coverage, in case something happens to one of them or to the house. If you are the type of person that know how to lead then go for it ! Otherwise think twice!
If you hire a property manager it's going to cost you a lot of money to pay him,they don't come cheap!
2007-10-24 05:53:34 · answer #3 · answered by bornfree 5 · 0⤊ 0⤋
You are better off renting then trying to sell especially if you are going to break even on it. With someone living there, you can save the money on the lawn care services. If you are uncomfortable with the screening process, you could always have a real estate agency help with the renting. They will find, do the contract and I even think they do the finance check on the person. And since you have relatives in the area, they can keep an eye on things for you. Good Luck.
2016-05-25 12:17:25 · answer #4 · answered by Anonymous · 0⤊ 0⤋
MOST IMPORTANT
A)1 months security deposit doesn't usually cover the damage to repair after they leave. B) Never Rent to Friends. C) A multi unit (3 -4 units) is better than a single house. It spreads the risk over several renters. If you have a single unit, Your dependent on one tenant for the whole mortgage.
D) You Have to schedule time to maintain the property. Tenants won't do it. E) Also budget for the refurbs after each tenant moves out.
2007-10-24 06:05:31 · answer #5 · answered by cobbcountywaterboy 1 · 0⤊ 0⤋
I would probably suggest a house flip instead of getting a rental. Buy something and put a little money in it and get a substantial return. Rentals are good for the long term but it will be years before you see a real return on your money. Property must be maintained and in the rental business renters have most of the rights so one bad renter could make things difficult for years to come.
2007-10-24 05:51:29 · answer #6 · answered by Anonymous · 0⤊ 0⤋
You might consider hiring a real estate agent or company to act as Property Managers to give you peace of mind, worth the money. There is going to be a lot of maintenance on your part.
2007-10-24 05:48:41 · answer #7 · answered by Sleek 7 · 0⤊ 0⤋
I would seek the advice of a real estate agent that handles rental property. In fact there are agencys that will manage your property and you pay them 10% and they mail you a check. Look in the phone book under property management
2007-10-24 05:51:36 · answer #8 · answered by d b 3 · 0⤊ 0⤋
increased taxes.. form both the county and federal
gettin screwed by your tenants
....
unless u have plenty of money to start this and not on a single house i wouldnt unless u get plenty of a upfront deposit
2007-10-24 05:50:15 · answer #9 · answered by pokerfaces55 5 · 0⤊ 0⤋
That you might not have tenants at all or at least not continuously, but your mortgage will always be due.
2007-10-24 05:49:33 · answer #10 · answered by Anonymous · 0⤊ 0⤋