The hubs and I are getting ready to relocate to another state. We own our current home, so of course, the question of do we rent it out or sell it came up in our planning discussions. At first, renting seemed like a great option. We could make a little extra money while someone else could pay our mortgage, and we wouldn’t have to go through the hassle of hiring a realtor to sell our home while trying to move. There are even agencies that will screen applicants and manage the rental property for you, for a fee. But the more I looked into what it takes to be a landlord, the more it sounded like it wasn’t a great fit for us.
Reason 1: Finding Renters
College kids? Smokers? Pet owners? Who do you rent to, and how do you screen them? There are a lot of laws stating what you can and cannot discriminate against, and rightly so. You shouldn’t tell someone they cannot rent your place because of their age, ability or race, among other things, but you should do a credit and background check on any applicants and you will have to decide what your standards are. It’s ok to say no pets, but unless you are renting out a place in a senior housing community, you can’t say no kids under a certain age.
Not all renters are terrible at cleaning and taking care of something that isn’t theirs, but face it, finding the perfect people to rent your home to, and trusting them to care for it like it’s their own, is tough. It can take months to find good renters, and you are still on the hook for the mortgage and any other bills that need to be paid, renters or not.
You can find an agency who will help you with this step by accepting applications, screening them and running credit and background checks, but you will have to pay them for that service. You can run the screening yourself, but that takes time and money too. I know we aren’t interested in investing that much time.
Reason 2: Maintenance
Even though you aren’t living there, you are still responsible for the maintenance of the home. This means if there is an HOA, you can require your tenants to comply with requirements, but it’s up to you to ensure they do, or it’s your fine to pay. You also must ensure all appliances are in working order, that any safety hazards are addressed in an appropriate time frame, and that your property meets all codes for your city, county or state. These vary by location, so make sure you know the ones for your area.
You can pay the same agency who will screen renters for you to take care of some of the maintenance, and some even have different monetary levels they will cover for immediate fix purposes and bill you for later, but one way or another, you are paying for any repairs, with time and money. This is one cost we aren’t willing to take on, since the rent you charge may not be enough to cover any costs of repairs.
Reason 3: Emergencies
As stated above, you are responsible for all appliances being in working order. Which also means you have to replace the ones that break, and sometimes they break with gusto. It’s 2 am on a Tuesday and a toilet has overflowed and there is water everywhere and it’s beginning to leak to the condo below, or it’s 4 am on Sunday and the water heater has gone out, or the furnace has decided to stop working in the middle of January.
It really doesn’t matter when or what day, these are all things that must be fixed and fixed quickly. Think about how much money you will need to have readily available to cover these kinds of emergencies, and add to that the time commitment you are making. This alone was enough to convince us this was not a good idea. Ever have to pay a plumber emergency weekend rates? You could practically pay for a Hawaiian vacation with that kind of money.
Reason 4: Evictions are traumatic for everyone
What happens when your tenant refuses to pay the rent? You evict them, right? Not as easy as it sounds. Depending on the laws where you live, this process can take 6 months or longer. Yep, 6 months without you getting paid the rent, and 6 months for the renters to be on your property, potentially damaging things that you will have to pay to replace or fix. And you still have to pay the mortgage, insurance, HOA fees, and any expenses that you may have been relying on the rent to cover.
The laws out there are designed to protect renters from shady landlords, and there are some in place to protect landlords from shady renters, but we all know the application of those laws can have mixed or unintended results.
I have seen family members get evicted and other have to evict renters from their properties. It’s been sad and heartbreaking on both sides, and it’s not something I ever want to witness again.
Reason 5: Knowing the laws
I’ll be honest here, I’m way too lazy to keep up with every minute detail of landlord/tenant law. There are a lot of regulations and statutes in our area, meant to protect both parties, and it turns out, I’m just not willing to expend the mental energy required to keep up with them. Make sure that you are before taking this on.
Still think being a landlord is for you? Know what you are getting into before you jump in. Research the laws and regulations of your city, county or state, as well as the federal laws that apply. Research property management companies for services and rates, and if you can, reach out to some other property owners to get their take. Being prepared and knowing all the facts before you put out an ad may save you time, money and a lot of headache down the road. Good luck!