The COVID-19 pandemic has made a significant impact on the housing market. Given that we are currently in a recession, a lot of questions hang in the air if you were planning on selling your house. In many cases, it makes the most sense to sell your current home when buying a new one, but another viable option is to transform your current home into a rental. Below, learn more about this process and discover if it would be a smart move for your family.
Why Transition to a Long-Term Rental?
Owning a long-term rental comes with several benefits. For starters, SmartMove points out that renting out your home can provide you with a bit of extra income each month. Plus, unlike owning a vacation rental, you don’t have to deal with constant turnover or worry about cleaning up after each guest leaves. As Landlordology explains, there are also a variety of tax benefits you can take advantage of.
As an added perk, if you keep your home rather than selling it now, it may increase in value by the time you do sell it. Properties can appreciate on their own over time, but you can also maximize your home’s future value by staying on top of maintenance while renting it out.
Keep in mind that you also have to deal with a few negative aspects of being a landlord, such as doing repairs and finding good tenants. This could involve tackling some projects yourself or hiring professionals to do some of the more involved jobs for you, removing debris from your gutters or trimming trees away from the house. But if you’re not in a position to manage the property yourself, The Balance points out that you can always hire a property manager to take care of the day-to-day aspects you don’t want to bother with.
How the Pandemic Affects the Rental Market
The housing market is affected by the pandemic in a variety of ways. Many people are struggling to pay their rent or mortgage. In many situations, lenders and landlords have had to make concessions so people can keep their housing. If you’re thinking about turning your home into a rental, it’s important to understand the unique challenges that the pandemic might present to you as a landlord.
Keep in mind that people dealing with job losses might be in a situation where they need to sell their homes in order to make ends meet. In this scenario, the need for affordable rental housing is more important than ever. If you are in a position where you are able to offer more affordable rental housing, you likely won’t have any trouble finding a tenant.
How to Turn Your Home into a Rental
Renting out your home requires a bit of work in the beginning. A good starting point is to check market trends over the past month so you can figure out what’s going on near you. Kiplinger suggests that you also start by finding a real estate agent. An agent can help you set a reasonable rental rate while also helping you find prospective tenants. Agents can also provide market updates relating to the pandemic so you can make the best choices possible.
In the beginning, you’ll also want to make sure your insurance coverage is appropriate, since coverage is different for rentals. Additionally, you will need to have a solid lease agreement that covers your bases, and be prepared to screen potential tenants carefully.
If you’re finding it difficult to get a good asking price on your home or you can’t find any interested buyers, turning your house into a rental might be the perfect solution. Renting out your home during a pandemic can provide additional income for your family as you transition to a new home. And by listing your home for rent at a reasonable rate, you might be able to help another family that needs affordable housing as a result of the pandemic.
For more help with taking control of your finances, contact Ted James, a professional financial counsellor and coach with an MBA in Finance.