There are a number of circumstances in which you may find yourself owning a house which you no longer wish to dwell in. Perhaps you've moved in with a partner. Perhaps you've inherited a property. Perhaps your work has taken you to a new part of the country and you're not ready to sell or the market is slow and you don't want your house to sit empty. However, it is not as simple as putting an ad in the newspaper and watching the rent roll in every week.
Firstly, you must
determine if you are prepared for the reality of seeing renting out your
home as a business. If you are nervous about strangers moving into your
home or ill-prepared for the financial realities of being a landlord it
can be an expensive and stressful exercise.
You need to consider
the cost of any repairs or tasks that will need doing before the house
is fit to rent. If a window takes a firm shove to open, you can
guarantee one shove too many will leave you with a repair bill. No one
is going to be as concerned about the maintenance of your home as you
are, so it is in your best interests to ensure there are not any little
problems which could grow into big ones. It is a good idea to work out a
budget (best case and worst case) so you know exactly what you are
getting yourself into.
You will also need to check out insurance,
tenancy agreements, procedures for lodging bonds and establish a
separate account for rent to be paid into. It is important to talk to
your bank as the terms of mortgages are different for rental properties
than for private dwellings.
A major decision will be whether you
intend to manage the property yourself, or employ the services of a
professional property manager. Although there are costs associated with
hiring someone to manage your property for you, it goes a long way to
ensuring all your legal obligations are met and that issues like urgent
repairs and rent arrears are dealt with promptly. A major consideration
is screening prospective tenants: gut feelings and likeable
personalities are no substitute for credit checks and references. It
does cost to have your tenants screened, but is generally worthwhile in
the long run. If things do go wrong, a property manager is able to be a
professional third party to deal with eviction procedures and bond
If your house has a good level of equity, is in good
condition and is low maintenance and is also in an area where there is
reasonable demand for rental properties, renting out your home can make
great financial sense.