Chances are you’ve heard horror stories from accidental landlords about costly evictions, destroyed rentals, and “tenants from hell.” You might know a dozen reasons why you shouldn’t rent out your property. Plus, you may not even understand how to rent your house… but still, you might simply need to turn your home into a rental property. Perhaps you…
Tried selling—but the investment property market is weak
Have been temporarily transferred out of the area for work
Owe more than your house is worth, but can cover the mortgage with rental income
Realized the incredible wealth-building opportunities that a rental property can provide for your financial future.
Yes, the bad stories receive the most press and attention. But here’s the facts: Every day, millions of landlords rent out houses to good tenants. With proper planning and preparation, you can minimize the hassles and turn your home into a profitable venture.
Purchasing your first rental property is just the beginning of your real estate journey, because being a good landlord is almost as important as making good deals. BiggerPockets’ free guide How to Become a Landlord: Managing Rental Properties for Real Estate Investors will teach you everything—from setting rent to handling evictions.
Should You Rent Your House Out?
The first question to ask yourself is: Should you rent or sell your home? I’d like to make the case for why you should rent out your house. Here’s why.
Your primary home, while a necessity in life, is not typically an asset or investment. An asset makes you money. A liability costs you money. By renting out your home, you transform a liability into an asset.
You can hold onto your property while rental income pays down your mortgage. Over time, rental property values (hopefully) will climb and build your wealth. If you can rent out your house for more than your monthly expenses, you will also experience additional monthly cash flow. That’s the goal for all potential landlords—and what we at BiggerPockets want to help you achieve.
Start your investment career with no additional costs. Renting your property could be the first step in a tried-and-true method for building wealth. Many real estate investors start this way—renting out their homes as they upgrade to bigger or better houses. This may also help fund your retirement, as you may end up owning multiple properties “free and clear” by the time you are ready to retire, providing monthly rental income or a lump sum if you sell.
Retain the possibility of returning to that home. This is especially helpful if you’ve been forced to move quickly because of a temporary job relocation.
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